Hell is Good for Growth (or maybe vice versa)

The Protestant Work Ethic is back, this time supported by econometrics….. A recent article in the Boston Globe summed up research showing that a belief in hell is good for growth, and other linkages between religion and pergatorydevelopment. Highlights:

‘A pair of Harvard researchers recently examined 40 years of data from dozens of countries, trying to sort out the economic impact of religious beliefs or practices. They found that religion has a measurable effect on developing economies – and the most powerful influence relates to how strongly people believe in hell.

That hell could matter to economic growth might seem surprising, since you can’t prove it exists, let alone quantify it. It stands as one of the more intriguing findings in a growing body of recent research exploring how religion might influence the wealth and prosperity of societies. In recent years, Italian economists have presented findings that religion can boost GDP by increasing trust within a society; researchers in the United States showed that religion reduces corruption and increases respect for law in ways that boost overall economic growth. A number of researchers have documented how merchants used religious backgrounds to establish one another’s reliability.

In a sense, religion and economics have long been intertwined. There are more verses on money and finance in the Bible than there are verses on prayer. Religious denominations affect economics by creating bonds of trust and shared commitment among small groups, both necessary qualities for lending and trade. In the Middle Ages, studies show, monk-run estates outperformed those that used serfs, thanks to religiously inspired cooperation and frugality. The Quakers of 18th-century Britain, renowned for their scrupulous honesty, came to dominate British finance. Ultra-orthodox Jews similarly dominate New York’s diamond trade because of levels of trust based on religion. Modern religious kibbutzim on average outperform their secular rivals, in part because of trust built through engaging in communal religious rituals.

In 1905, Max Weber, a German sociologist who studied religions, identified

Engines of Growth?
Engines of Growth?

what he called “the Protestant work ethic” as the driving force behind modern capitalism in the West. But by the middle of the 20th century, most sociologists had dismissed Weber’s thesis as based on bad theology and bad statistics.

But over the last several decades, better sets of statistics on religion have become available, and improvements in computing power and mathematical techniques have made it easier for economists to run very large statistical analyses, with hundreds of variables.

Robert Barro, a renowned economist at Harvard, and his wife, Rachel McCleary, a researcher at Harvard’s Taubman Center, collected data from 59 countries where a majority of the population followed one of the four major religions, Christianity, Islam, Hinduism, or Buddhism. They ran this data – which covered slices of years from 1981 to 2000, measuring things like levels of belief in God, afterlife beliefs, and worship attendance – through statistical models. Their results show a strong correlation between economic growth and certain shifts in beliefs, though only in developing countries. Most strikingly, if belief in hell jumps up sharply while actual church attendance stays flat, it correlates with economic growth. Belief in heaven also has a similar effect, though less pronounced. Mere belief in God has no effect one way or the other. Meanwhile, if church attendance actually rises, it slows growth in developing economies.’

Why? Possible answers include:
– all major religions extol sacrifice, hard work and thrift
– ‘Those who believed in a punishing God cheat less’, according to behavioural experiments
– ‘private property protections developed by the Church to guard against grasping secular rulers gave Catholic – and eventually Protestant – nations stronger protections for individual rights than other nations, creating incentive for individual success.’
– Some religions spark growth by promoting literacy to read holy books

(Or maybe they’ve got the arrow of causality the wrong way round and high speed growth makes you believe in hell…….)

Anyway, Weber may be rehabilitated, but no-one is suggesting (yet) that the IMF should start insisting on belief in eternal damnation as one of its standard loan conditions…… [h/t Nicholas Colloff]

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7 Responses to “Hell is Good for Growth (or maybe vice versa)”
  1. Ken Smith

    Very interesting , I’ve always been intrigued as to whether Islam’s current aversion to charging conventional interest and Christianity’s former condemnation of interest have had any effect on development , either positive in that funds are diverted to more communal endeavours or negative in that it’s kept under the mattress , is there any evidence out there ?

  2. Michael

    To play with the arc of causality — perhaps “belief in hell” and “investment in the future” are both characteristics of longer time horizons in general and lower immediate discount rates.

    That is, once you start planning for the future, you start REALLY planning for the future.

  3. Michael

    Ooh ooh and we could also include the idea of enforcement mechanisms. Most conflicts cost far more than the issue being fought over. Maybe belief in Heaven and Hell lets people pick battles?

  4. Sharon N

    Thank you for this very interesting post. My over-arching question is: Is the trust that seems to be caused due to shared religious beliefs actually due to sharing a group identity? In this, is the dynamic of in-group versus out-of-group exhibited, where individuals are far more likely to trust individuals “like” themselves, and distrust anyone who is out-of-group? Or, are individuals who believe in a God likely to cooperate with other God-fearing individuals, regardless of what their specific religious beliefs are? If the latter is true, then it is abundantly clear that religion and economic growth have a strong correlation. If individuals are unwilling to collaborate with others of different religions, however, I believe that the “in-group” and “out-of-group” mechanisms are more prevalent than the belief in a God.

  5. VEDiCarlo

    Very interesting study. As somewhat of a religious cynic, it is easy to identify Western concepts of aid as charity and the moral imperative as harmful legacies of the Protestant ethic. While sensible, it is upsetting that research confirms the manipulation of religion increases economic incentives.

  6. Mark Robertson

    I find this post very interesting. While believing in the concepts of heaven and hell seem to promote growth, chuch or worship attendance does not. I think there must be something missing here. Perhaps the availability of a church or worship place?

    I also think Sharon’s point of a feeling of “likeness” has validity. It would only help explain local growth and cooperation though.

    Perhaps the beliefs in eternal punishments or rewards is much more motivating than has been thought in recent times.

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