Is a Higher Calling Enough? Incentive Compensation in the Church

Abstract:     
We study the compensation and productivity of more than 2,000 Methodist ministers in a 43-year panel data set. The church appears to use pay-for-performance incentives for its clergy, as their compensation follows a sharing rule by which pastors receive approximately 3% of the incremental revenue from membership increases. Ministers receive the strongest rewards for attracting new parishioners who switch from other congregations within their denomination. Monetary incentives are weaker in settings where ministers have less control over their measured performance.

Keywords: Compensation, Incentives, Churches, Religion

JEL Classifications: G30, J30, J33, J45

Working Paper Series