The Economics of Christian Reformation

The social fabric of a country has a lot of inertia. It takes generations for norms to change, in large part because people rarely change during their lifetime, and if there is any change it is towards conservatism, that is, preserving the status quo. Yet sometimes change spreads quickly, like a revolution. In some sense we see this with the Arab Spring. All it needed was a small spark, and that spark may seem irrelevant at first. Another dramatic social change was the Christian Reformation that started with a simple priest in a completely irrelevant town of Saxony. Martin Luther was a spark that somehow set on fire an existing social norm, Catholicism, and set in motion a revolution that would keep Europe busy for centuries. How could this happen?

Philipp Robinson Rössner points out that central Germany suffered at the time from economic depression and deflation, at least partly as a consequence from a decline in silver supplies. This context deeply influenced Martin Luther's thinking, which found a receptive audience throughout the region. One thing that I take away from this is that the Reformation possibly happened because currency was tied to silver. Had the region had a modern central bank with fiat money, the money supply could have adapted to economic circumstances and the Reformation may have never happened. Europe would have suffered from much fewer wars, and the world's history (and economy) would have been quite different.

Savings and religion II

Various religions have different prescription on how rich people should be. Early Christians advocated low wealth and much redistribution, modern American Protestants seem to lean more towards wealth accumulation and little redistribution, to cite some extremes. What impact does religion have on savings behavior? Of course, nowadays it matters how religious people are. Conditional on a high level of religiosity, the religious affiliation should then matter. Earlier work using the PSID yields results that are puzzling to me: atheists save less.

Can new work by the same author, now going by the name of Anja Köbrich León, with the same dataset be illuminating? Well, not quite. In fact, the results do not seem to be robust across econometric methods, indicating some serious endogeneity issues, as has been hinted in the comments of the first post. So there, I had good reason to be puzzled.

PS: the earlier work is not cited in the extensive literature review. Is Anja hiding something here?

Protestantism and economic growth

Among Christians, Protestants have a reputation of hard workers. This is motivated by the preachings of the early reformers who have emphasized literacy and hard work, to the disadvantage of wasteful fun and decorum. This was quite a break from Catholicism, where decorum and the arts are very important. I am likely not alone in thinking that this explains why the South of Europe, predominantly Catholic, is poorer than the North.

Davide Cantoni makes me doubt that now but using a dataset that has fewer confounding factors than European national data: the Holy German Empire. Indeed, it was fractures in many fiefdoms of various religious orientations. Of course, economic data is rather limited for the sample periods of 1300 to 1900, so Cantoni does what economic historians typically do in such a situation: use population data, a presumably good proxy for economic development in a Malthusian world. There is rather good data for cities, and we know how they switched their religious denomination over time. And Cantoni finds nothings. No matter how he turns the data, Protestantism has no impact. Why? Maybe because we think of the teachings of Calvin when thinking about Protestantism, while Calvin was of limited impact? But what about the emphasis on literacy?

Machiavellian missionaries

I have had recently the opportunity to chat with a missionary who has been working as a bush doctor in Western Africa. I find it quite admirable that a Westerner is willing to leave easy life aside and spend many years in the middle of an inhospitable nowhere to help others. Of course, the end goal is to spread Christianity, and I have no problem if these free health services are provided through a sponsor.

What I found very disturbing, though, was the approach to converting the locals. Indeed, missionaries tell these pagans that now that they know about God, Jesus and the Bible, they will go to Hell if they do not convert. They would have avoided that fate had they remained ignorant. The missionaries are devout Christians and believe this as well. Can we then really say they care about the locals? They willingly paint the pagans into a corner, threatening them out of nowhere with the worst possible outcome in their afterlife. What is then the point of making terrestrial life a little better? In the end, many locals would much worse off after the arrival of the missionaries.