Wednesday, March 10, 2010

Savings and religion

What is the impact of religion on economic growth? The basic Solow growth model tells us that there are three engines to economic growth: capital accumulation, population growth and technological progress. It is quite obvious that religion has an influence on population growth (mostly by favoring it) and technological progress (typically by inhibiting it), but what about capital accumulation? Different religions have different attitudes with respect to afterlife, to property rights and to bequests, so some interesting results could emerge from an empirical study of savings across religious beliefs.

Anja Klaubert uses PSID data to study savings behavior by religious affiliation. Compared to a cross-country study where institutions are endogenous to dominant religions, a study centered in the US should be able to concentrate the impact of religions on individual behavior. It turns out all blends of Christianity pretty much look alike. It should surprise no one that Jews are most likely to save, and they save the most. However, atheists are the least likely to save. Why would that be? As they can less rely on a church in case they fall on hard times, they should be doing more precautionary savings. The lack of belief in afterlife should not be material, as afterlife is immaterial. And it is the religious people believing the world will end soon who should not be saving. To the contrary, the frequency of church attendance seems to be positively associated with the likelihood of saving. All this is a real puzzle to me, and unfortunately the author does not address it. Do you have an idea?


Agent Continuum said...

I don't see the author doing anything substantial about [list of econometric scary stuff].

Religiousness is engeonous and therefore not randomly assigned or orthogonal to unobservables (surely!). Also, the absence of information on religious affiliation from PSID is not random, so there are sample selection issues.

Also, [insert standard rant about statistical vs. economic significance].

Min said...

"When I mention religion, I mean the Christian religion; and not only the Christian religion, but the Protestant religion; and not only the Protestant religion, but the Church of England."

-- Thwackum, in Fielding's "Tom Jones"

In the U. S. religion is largely cultural. You might think, since Jesus cautions against laying up stores of material treasure on earth instead of spiritual treasure in heaven, and the injunction to give no thought to the morrow, that Christianity would be negatively associated with saving, or, based upon other teachings, that it would be positively associated with liberalism, or based upon the structure of the early church, that it would be positively associated with socialism. Not so. Of course, Weber talked about these kinds of contradictions.

Since the Bible Belt has a large Scotch-Irish heritage, the attitude towards savings is probably found in Scotch-Irish or Scottish culture rather than in religion per se.

Anonymous said...

If she didn't control for education and income, the observation is useless...I imagine atheists are wealthier and the need for savings is lower.

To extend that comment and flip your observation that one would think atheists would save the most because they don't have a church to fall back on--we might expect people to become atheists when they don't NEED a church to fall back on...when they become wealthy.