Tag Archives: Weber thesis

Religion and Economics: Trust, Hell, and Keep it Minimal

Robert Barro, an economist at Harvard, and his wife, Rachel McCleary have returned to the question of the Weber thesis with rigorous statistical analysis, a pop article has some of their conclusions.

They found that the trust generated by a close knit community makes more money (and that is why the financial scandals have sent such a shiver in the community). Hell is a better motivator to attend services than theism, mere belief in God does not give enough incentive to waste time on religion. Long term literacy and skills raise income. And one need a certain ideal type of hell-less theism to create the world of Silicon Vally.

Does this explain why learning Torah is an activity that many value but don’t spend much time on? Since most Modern Orthodox don’t have a clear sense of hell, do they have a sense of punishment that keeps ‘em coming or is that why the community seems minimal at times. Is the tight knit social grouping all that is actually valued? What other applications does their reach have for the practices of the Jewish community?

On a larger scale, religious denominations affect economics by creating bonds of trust and shared commitment among small groups, both necessary qualities for lending and trade.. 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.

Most strikingly, if belief in hell jumps up sharply while actual church attendance stays flat, it correlates with economic growth. Mere belief in God has no effect one way or the other. Meanwhile, if church attendance actually rises, it slows growth in developing economies.

McCleary says this makes sense from a strictly economic standpoint – as economies develop and people can earn more money, their time becomes more valuable. For economic growth, she says, “What you want is to have people have their children grow up in a faith, but then they should become productive members of society. They shouldn’t be spending all their time in religious services.”

Robert D. Woodberry, a sociologist at University of Texas at Austin. He has mapped how missionaries spread literacy, technology, and civic institutions, and finds that those correlate strongly with economic growth. He argues in part that this helps explain why the once-poor but largely Protestant United States surpassed rich, Catholic Mexico after 1800.

Governments worldwide have tried to foster their own versions of Silicon Valley, and, lacking the California Bay Area’s particular culture and history, have mostly failed. While education and rule of law might seem straightforward secular policies, the cultural forces that carry them into a society, including religion, have a lot to do with whether people respect them.

The bigger application of research into religion, she thinks, isn’t to foster religious imperialism but to build a better-informed economics, and in the long run, better policy.