Religion and Economic Growth

Abstract

Empirical research on the determinants of economic growth has typically neglected the influence of religion. To fill this gap, we use international survey data on religiosity for a broad panel of countries to investigate the effects of church attendance and religious beliefs on economic growth. To isolate the direction of causation from religiosity to economic performance, we use instrumental variables suggested by our analysis of systems in which church attendance and beliefs are the dependent variables. The instruments are dummy variables for the presence of state religion and for regulation of the religion market, an indicator of religious pluralism, and the composition of religions. We find that economic growth responds positively to the extent of religious beliefs, notably those in hell and heaven, but negatively to church attendance. That is, growth depends on the extent of believing relative to belonging. These results accord with a perspective in which religious beliefs influence individual traits that enhance economic performance. The beliefs are, in turn, the principal output of the religion sector, and church attendance measures the inputs to this sector. Hence, for given beliefs, more church attendance signifies more resources used up by the religion sector.