The Political Economy of Beliefs: Why Fiscal and Social Conservatives/Liberals Come Hand-in-hand

85 Pages Posted: 9 Mar 2017 Last revised: 8 Jan 2019

See all articles by Daniel L. Chen

Daniel L. Chen

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France

Jo Thori Lind

University of Oslo - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 1, 2019

Abstract

Religious intensity as social insurance may explain why fiscal and social conservatives and fiscal and social liberals tend to come hand-in-hand. We find evidence that religious groups with greater within-group charitable giving are more against the welfare state and more socially conservative. The alliance reverses (social conservatives become fiscal liberals) for members of a state church and this reversal is unlikely to be driven by omitted environmental variables: increases in church-state separation precede increases in the alliance between fiscal and social conservatism. The theory provides a novel explanation for religious history: as elites gain access to alternative social insurance, they increase church-state separation to create a constituency for lower taxes. This holds if religious voters exceed non-religious voters, otherwise, elites prefer less church-state separation in order to curb the secular left, generating multiple steady states where some countries sustain high church-state separation, high religiosity, and low welfare state, and vice versa. We use this framework to explain the changing nature of religious movements, from Social Gospel to the religious right, and why church-state separation arose in the U.S. but not in many European countries.

Keywords: voting, religion, ideology, church-state separation, welfare state

JEL Classification: D31, D71, D72, D78, I38, Z12

Suggested Citation

Chen, Daniel L. and Lind, Jo Thori, The Political Economy of Beliefs: Why Fiscal and Social Conservatives/Liberals Come Hand-in-hand (January 1, 2019). Available at SSRN: https://ssrn.com/abstract=2928766 or http://dx.doi.org/10.2139/ssrn.2928766

Daniel L. Chen (Contact Author)

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France ( email )

21 allée de Brienne
31015 Toulouse cedex 6 France
Toulouse, 31015
France

Jo Thori Lind

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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