There has been a lot of talk about irrational exuberance in the housing market, of irrational fears in the current recession, and animal spirits in general. Given this, it seems natural to study whether religiosity would have had any impact on these developments. Concentration on evangelical protestants, Christopher Crowe finds that they are much more level-headed than the general population: wherever they population share is higher, house price volatility is lower.
The reasoning here is that their behavior is countercyclical. Evangelical protestants believe that we live in the end times, so any bad news is good news to them, and vice-versa. But the argument needs to be more subtle than that. Imagine that the current bad economic news is some sign of the end of the world. Then asset price should be going further down, as the horizon on which future expected returns are cumulated is shortened. This would lead to more volatility. Crowe argues instead that evangelical protestants are taught to live normally through the end times, and that they are more "joyful" when bad news, such as 9/11, occur. And this would make them spend more, including on housing.
I find this argument rather hard to swallow. But clearly, the empirics seem to be consistent with that. Also, interesting to see that the IMF is interested in this type of topic.