Economics of Religion and Culture

March 8 and 9, 2013
Daniel Hungerman of University of Notre Dame, Organizer

Thomas Triebs and Justin Tumlinson, Ifo Institute for Economic Research at the University of Munich

Learning Capitalism the Hard Way---Evidence from Germany's Reunification

Managing a firm in the master-planned economy of East Germany differed significantly from doing so in the free market economy of West Germany, at least in part, because Eastern social planners explicitly worked to remove the variability of the free market from their economy. Triebs and Tumlinson examine the lingering role of communism on the way former East German businesses forecast their future business performance. They pay special attention to how East German firms respond differently to market signals than their West German counterparts. It required nearly two decades for Eastern understanding of the market's role on productivity to converge to Western levels.

Saumitra Jha and Aprajit Mahajan, Stanford University

Trade, the State and Inter-Religious Trust: Evidence from South Asia

Jha and Mahajan provide evidence that the degree to which medieval Hindus and Muslims could provide complementary, non-replicable services and a mechanism to share the gains from exchange has resulted in a sustained legacy of ethnic tolerance in South Asian towns. Because of Muslim-specific advantages in Indian Ocean shipping, inter-ethnic complementarities were strongest in medieval trading ports, leading to the development of institutional mechanisms that further supported inter-ethnic exchange. Using novel town-level data spanning South Asia's medieval and colonial history, Jha and Mahajan find that medieval trading ports, despite being more ethnically mixed, were five times less prone to Hindu-Muslim riots between 1850-1950, two centuries after Europeans disrupted Muslim overseas trade dominance. Both case and representative household survey evidence show that these differences were transmitted via the persistence of institutions that emerged to support inter-ethnic medieval trade and continue to influence contemporary occupational choices, trust, and organizations.

Asaf Zussman, Hebrew University

The Effect of Political Violence on Religiosity: Evidence from Israel

Zussman studies how politically-motivated violence associated with the Israeli-Palestinian conflict affects religiosity among Jews and Muslims in Israel. Using data from comprehensive social surveys and relying on geographical and temporal variation in violence intensity to identify causal effects, this analysis yields robust evidence that violence makes both Jews and Muslims self-identify as more religious. Based on analysis of data from other surveys, Zussman argues that via its effects on religiosity, politically motivated violence may adversely influence Arab-Jewish relations inside Israel and the prospects of peace between Israel and its neighbors.

Elaine Liu, University of Houston; Juanjuan Meng, Peking University; and Tao-Yi Wang, National Taiwan University

Confucianism and Preferences: Evidence from Lab Experiments in Taiwan and China

Liu, Meng, and Wang attempt to determine whether Confucianism affects individual risk preferences, time preference, trust/trustworthiness, and the degree of honesty -- all factors that are relevant in economic decision making. They conduct an experiment in which a randomly chosen set of subjects are asked to read some text from the Analects of Confucius and then to make several decisions that involve cash rewards. Those decisions are compared to the decisions of another group of randomly selected subjects who did not read the same texts. A second goal of this study is to examine whether the impact of Confucianism, if any, differs depending on the political institution/environment. To that end, the researchers plan to conduct the same set of experiments in China and in Taiwan.

Angela Dills, and Rey Hernandez-Julian, Metropolitan State University of Denver

Religiosity and State Welfare

The Catholic sex abuse scandals reduced both membership and religiosity in the Catholic Church. Because government spending on welfare may substitute for the religious provision of social services, Dills and Hernandez-Julian consider whether this plausibly exogenous decline in religiosity affected several measures of the public taste towards government spending on welfare between 1990 and 2008. In places where more scandals occurred, individuals state a preference for less government provision of social services. In contrast, a higher level of abuse also is associated with an increase in voting for Democratic presidential candidates and an increase in per capita government welfare spending, although that increase is not sufficient to replace the decrease in Catholic-provided charity.

Daniel Chen, ETH Zurich, and Susan Yeh, George Mason University

How Do Rights Revolutions Occur? Theory and Evidence from First Amendment Jurisprudence, 1958-2008

Does law shape values? Chen and Yeh test a model of law and norms in an area of the law with emotional salience and controversy. Analyzing the random assignment of U.S. federal judges, they construct a sparse model for estimating treatment effects with high dimensional instruments. They find that Democratic appointees are 10 percent more likely to favor permissive obscenity standards. Given this variation, they estimate that progressive obscenity standards increase progressive sexual attitudes, non-marital sexual behavior especially by men, arrests for prostitution, rape, and drug violations, and the incidence of invisible STDs. To corroborate a causal channel, they conduct a field experiment, assigning workers to transcribe obscenity news reports. They find that exposure to progressive obscenity decisions leads to more progressive sexual attitudes, but not to self-reported sexual behavior. A second field experiment documents that exposure to conservative obscenity decisions leads to beliefs that extramarital sex is more prevalent. The shift in norm perception verifies a key assumption in the model, which predicts when law has backlash or expressive effects.

Sanjeev Kumar, Yale University, and Jason Fletcher, Yale University and NBER

Religion and Risky Health Behaviors among U.S. Adolescents and Adults

Recent studies analyzing the effects of religion on various economic, social, health, and political outcomes have been largely associational. Although some of these studies attempt to establish causation using the instrument variable (IV) method, the instrument they use---a county- level measure of religious market density---may be problematic. Moreover, the focus of most of the studies has been on religious rites and rituals -- that is, religious participation, or the intensity of participation. During one's adolescent years, religious participation might be a matter of limited choice for many individuals, as it is often heavily reliant on parents and on family background more generally. Using the National Longitudinal Study of Adolescent Health, Kumar and Fletcher analyze the effect of a broad set of measures of religiosity on substance use at different stages of the life course. In contrast to previous studies, this one finds positive effects of religion on avoiding all addictive substances during adolescence, but not in a consistent fashion during the later years for any other illicit drugs, except for crystal meth and marijuana.

Daniel Hungerman

The Effect of Education on Religion: Evidence from Compulsory Schooling Laws

For over a century, social scientists have debated how educational attainment affects religious belief. Hungerman uses Canadian compulsory schooling laws to identify the relationship between completed schooling and later religiosity. He finds that higher levels of education lead to lower levels of religious affiliation later in life. An additional year of education leads to a 4-percentage-point decline in the likelihood that an individual identifies with any religious tradition. Extrapolating the results to the broader population would suggest that increases in schooling can explain most of the large rise in non-affiliation in Canada in recent decades.

Sonia Bhalotra, University Bristol; Guilhem Cassan, University of Namur; Irma Clots-Figueras, Universidad Carlos III Madrid; and Lakshmi Iyer, Harvard University

Politician Identity and Health Outcomes: Does Religion Matter?

Bhalotra, Cassan, Clots-Figueras, and Iyer analyze how the religious identity of political leaders influences health outcomes, both for citizens of their religious group and for the population as a whole. They focus on the consequences of electing Muslim politicians in India. They construct a new dataset containing the first records of the religious identity of state-level elected representatives in India, inferring religious identity from politician names over the period 1980-2000. They control for a range of observables including the education and wealth of the individual household, and for unobservable heterogeneity using district and year fixed effects. They use a fuzzy regression discontinuity design that involves instrumenting the overall share of Muslim legislators in a district-year with the share that are elected in close elections against Hindu candidates, while controlling for a polynomial in the vote margin. The premise is that the identity of the winner in a close election is random; regions in which the electorate largely identifies with one religion would not witness close elections. They find that the presence of Muslims in elected office leads to significant reductions in infant mortality. A single standard deviation increase in Muslim political representation causes a 3 percent point drop in the infant mortality rate, which is 35 percent of the mean. However, they find no evidence of religious favoritism: both Muslims and non-Muslims benefit in terms of infant survival from the presence of Muslim politicians.

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