Religiosity and the Business Cycle in the New York Times

Welcome to those who read about my research on the business cycle and religiosity in the New York Times or at Marginal Revolution. If you are interested in the paper "Praying for a Recession" go here. If you want a less technical overview on the paper see this discussion at Mark Thoma's blog. I recently gave another paper along the same lines at the Southern Economic Association that can be accessed here and was discussed here.

More on the Business Cycle and the Church

I just presented a paper this past weekend looking at the dynamic response of religious participation and religious giving to economic shocks. This paper follows an earlier one where I found a strong countercyclical component to religious participation by evangelical Protestants and a slightly procyclical component for mainline Protestants. Economic theory provides good motivations for these results. Given my interest in this field of economics--yes, I am macroeconomist dabbling in the economics of religion--I was pleased to find the following video clip on CNN. It shows people turning to church as a means to smooth their consumption over this business cycle.

More Economics of Religion

Although I consider myself a macroeconomist, I really enjoy dabbling in the economics of religion. As noted in previous postings, I have done some work on the relationship between religiosity and the business cycle. I have also pointed you toward some of interesting work done by Jonathan Gruber and Daniel Hungerman. If you are interested in this field of economics let me direct you to some other resources. First, check out this EconTalk with Larry Iannaccone, probably the seminal researcher in this field of economics. He continues to lead out in this area and has formed the Association for the Study of Religion, Economics, and Culture(ASREC). They have an annual meeting where you will find many interesting papers covering the economics of religion. Second, take a look at this survey paper titled Introduction to the Economics of Religion. It comes from the Journal of Economic Literature and is a great overview of the field. Finally, here and here are two popular articles that look at the economics of religion.

By the way, I happen to be organizing a session on the economics of religion at the next Southern Economic Association meeting. If you happen to be in Washington D.C. in November and are interested in this topic please drop by.

More on the Opportunity Cost of Religion

Mark Thoma points us to a paper by Jonathan Gruber and Daniel Hungerman titled "The Church vs. the Mall: What Happens When Religion Faces Increased Secular Competition?" The authors show that when you increase the opportunity costs of church attendance--in this case by repealing Sunday blue laws that in turn open up other opportunities on Sunday like shopping at the mall--there could be a decline in attendance. There may also be an effect on religious financial giving:

When the laws are repealed, there are two possible effects. First, time devoted to religious pursuits unambiguously falls, as individuals choose to devote more time to work and more secular consumption. Second, there is an ambiguous effect on religious contributions. On the one had incomes may rise due to new work activities, and this could increase contributions. On the other hand, new secular consumption opportunities compete with religious giving for a share of the individual’s budget, and this could decrease contributions.

What, then, do the authors find?

Thus, secular competition does matter for religious participation: increased secular opportunities for work and leisure on Sundays lead to less time at church and lower religious contributions.

The authors also find that the repeal of the blue laws lead to a significant pick up in drinking and drug use by religious people. The authors conclude by discussing two implications of their research:

First, this finding serves to validate economic models of religiosity, as discussed extensively by Iannaccone (1998). Religious participation is not independent of economic influences such as the opportunity cost of church-going.

I concur and believe it is consistent with our earlier discussions on the business cycle and religiosity. Now to the second implication:

Second, this finding can be a valuable input into the discussion of the regulation of religion and substitutable activities. Absent strong negative externalities, there seems little argument for restricting the days of the week that commerce can take place. But religious participation may be one of those activities with such externalities. As such, secular regulations such as blue laws which promote religious participation can have external effects. Whether those external effects are sufficiently large to justify restrictions on commerce is an excellent question for future research.

I believe the negative externalities they are referring to is the steep pick up in drinking and drug use by religious people after the repeal of the blue laws. However, do we really want to mix church and state because some people are now making bad choices? I certainly would not want to make the case for more state intervention in order to promote religious participation, especially one that promotes participation on a particular day of worship. What about those who worship on Saturday or who do not worship at all? There are all kinds of problems with this supposed implication.

With that said, this is an interesting paper--take a look.

Economic Conditions and Religiosity

Andrew Gelman graciously takes note of my research on the business cycle and religiosity over at Statistical Modeling, Causal Inference, and Social Science. One of his blog readers emailed me and requested I explain more thoroughly how macroeconomic shocks could affect religiosity. Below is an excerpt from a forthcoming article where I attempt to explain the relationship in less technical terms :

The first thing economic theory says is that the cost of being religious can change over the business cycle. During an economic boom individuals may find increased opportunities for higher earnings. The potential for higher earnings, in turn, make time-intensive religious activities like church attendance costly for these individuals. Consider, for example, a Southern Baptist from a low-income family being offered the opportunity of getting overtime pay to work at a retail store on Sunday morning. For this Southern Baptist, going to church suddenly becomes a lot more costly and thus, increases the likelihood of him opting for work instead of church. On the other hand, during an economic downturn, time-intensive religious activities become less costly as opportunities for earnings decline. Here, the overtime opportunity for the Southern Baptist disappears and church attendance suddenly becomes more affordable. This idea that higher earnings lead individuals to substitute out of leisure activities, like going to church, into more work and vice versa is called the substitution effect. It implies there should be a countercyclical component to religiosity.

There are, however, two countervailing forces against the substitution effect. The first one is called the income effect and says that the higher earnings also mean individuals can work fewer hours than before and still get the same pay. They, therefore, have more time for leisure activities, like church attendance, without a loss of income. Consider, for example, an Episcopalian whose consulting business was able to increase its fees because of the increased demand for its services during an economic boom. The Episcopalian can now afford to take on fewer consulting projects, without a loss of income, and enjoy more time at church. During an economic downturn, however, the consulting fees would drop. The Episcopalian would now have to work more hours to maintain his income, leaving less time for church. The second countervailing force is something called the wealth effect. The wealth effect says that as individuals’ wealth increases from valuations gains in their homes, stocks, and other assets they have less need to save and thus less need to work. In turn, there should be more time for church attendance and vice versa. Imagine now that the Episcopalian had a large amount of funds in the stock market during a stock market boom. His wealth would increase dramatically and make leisure activities like church attendance more affordable. Both of these effects imply there could be a procyclical component to religious activities.

Economic theory is generally silent on which of these effects dominates the decision to work. Research has shown, however, that evangelicals Protestants typically fall into a lower socioeconomic grouping than mainline Protestants (Pyle, 2006). This suggests that the substitution effect should be more important for evangelical Protestants. In other words, since evangelical Protestants are starting from a lower income level, like the Southern Baptist above, they should be eager to take advantage of higher earning opportunities, whereas mainline Protestants, like the Episcopal above, who already have relatively high income levels may see less need to do so. Moreover, mainline Protestants have more wealth and should therefore be more sensitive to the wealth effect compared to their poorer evangelical Protestant brethren. A priori, then, the changing cost of being religious perspective points to evangelical Protestants being more countercyclical in their religiosity than mainline Protestants.

The second thing economic theory had to say about this issue is that individuals generally desire to have a steady stream of housing, clothes, food, and other consumption over the business cycle. During a recession individuals may become unemployed or find their earnings fall. To prevent these developments from being disruptive, individuals may turn to churches for consumption needs such as shelter and groceries. Individuals may also turn to churches for less tangible consumption needs such as a sense of certainty and divine guidance in a job search. Such a response implies there should be a countercyclical component to religiosity. Note, however, that the wealthier mainline Protestants are in far less need of churches to provide consumption for them. In addition, mainline Protestant denominations often place less emphasis on absolute truths than evangelical ones and, as a result, are not able to create the same sense of certainty or appeal to an all powerful, job-providing God. Individuals, therefore, may choose to join an evangelical Protestant denomination rather a mainline one during a recession.[1] Consequently, the consumption smoothing ability of churches also points to a stronger countercyclical component for evangelical Protestants.

[1] Conversely, these same individuals may find a mainline Protestant denomination more appealing than an evangelical one during an economic upturn when the need for certainty and employment are less pressing concerns.

Update: If the SSRN link to my paper is not working, try this one.
Update 2: WSJ's Real Time Economics the Economist's View also take note of my research.

The Opiate of the Elite or Simply the Income Effect Dominating?

Andrew Gelman et al. have a article over at Vox EU titled "Opiate of the Elites." These authors show that, contrary to conventional wisdom, religion is not the opiate of the poor masses, but of those with higher incomes or the elites. They find that being religious increases the probability of someone voting based on moral and cultural concerns if that person is in a higher income group. Being religious and in a lower income group reduces the probability. Here is one of their graphs that captures this relationship in terms of who voted for GW Bush:

The authors conclude that "income predicts how you vote—if you are religious." They explain this finding by appealing to a view of "post-materialism—the idea that, as people and societies get richer, their concerns shift from mundane bread-and-butter issues to cultural and spiritual concerns." Stated differently, "economic concerns are more important in poorer areas, with social and religious issues mattering more among the rich."

If one assumes that voting for moral and cultural reasons also implies other time commitments to these issues (staying informed by reading and watching TV, discussing issues with friends, supporting rallies, etc.), then these results could also be interpreted by using what economic theory tell us about the labor-leisure choice via the substitution and income effects. For those individuals in the lower income group, it is likely that the substitution effect--which says the opportunity costs of social activism, forgone earnings, is too high--dominates. Their time is better spent working than worrying about social issues. On the other hand, those individuals in higher income groups most likely have the income effect--which says they can afford leisure activities like social activism--dominate. Simply, as individuals become richer they can afford to become more engaged in these social issues, if that is what they want.

This is a theme I touch on in my own research that looks at the relationship between the business cycle and religiosity. I find that mainline Protestant denominations--which tend to have higher income earners--do well in terms of growth during economic booms while evangelical Protestants denominations--which tend to have lower income earners--actually struggle. (During economic downturns the outcomes are reversed--evangelicals Protestant denominations thrive.) In general, I find mainline Protestants to have a strong procyclical component to their religiosity while evangelicals have a strong countercyclical component. These findings can be explained by again appealing to the labor-leisure choice explained by economic theory.

So, in short, the fascinating findings of Gelman et al., then, can be explained using standard economic theory.

Update: Andrew Gelman responds here and I provide some clarification here.

What Does the Recession Mean for Religiosity?

I have received some inquiries about my research that looks at the relationship between the business cycle and religiosity. I have posted previously about it, but given the increased interest and the fact that the U.S. appears to be going into--if not already in--a recession I am reposting the abstract and the link to the paper.

Praying for a Recession: The Business Cycle and Protestant Church Growth in the United States (link)

Abstract: Some observers believe the business cycle influences religiosity. This possibility is empirically explored in this paper by examining the relationship between macroeconomic conditions and Protestant religiosity in the United States. The findings of this paper suggest there is a strong countercyclical component to religiosity for evangelical Protestants while for mainline Protestants there is both a weak countercyclical component and a strong procyclical component.

How Much Time Do Americans Allocate to Religion?

This past November I presented a paper at the SSSR/ASREC annual meetings that looked at the relationship between the business cycle and religiosity (see previous posting on this paper). I was privileged to present my paper in a session where Ariela Keysar and Barry Kosmin gave their paper titled "Measuring Religious Commitment and Secularization Through Time-Use Data." This paper examines the standard labor economic question of how individuals in the United States allocate their time, with special emphasis on how much time is spent on religious and spiritual activities. The study looks at allocation of time for a typical weekday as well as for the presumably religious Sunday.

This study uses data from data from the Bureau of Labor Statistics’ American Time Use Survey (ATUS) over the years 2003 to 2006. Ariela and Barry explain that the "ATUS asks people to keep a diary and describe in detail their daily activities, without the prompts or cues that are a feature of interviewer surveys. There is therefore no reference to religion or any other domain. This methodology reduces over-reporting of religious practice by minimizing the tendency towards a social desirability bias that has been identified as a problem of many surveys of American religion especially of Sunday worship." This study, therefore, provides a more robust measure of religiosity in America than past studies.

Okay, what exactly do they find? Here are some key excerpts:

"The average American spends a total of 3 minutes on 'religious and spiritual activities' on the normal weekday. This is because only 4.4% of the population actually reports participating in this form of behavior. Among this small minority of participants, 1.12 hours on average are actually spent on religious activities. Weekdays are for work and ATUS confirms this. The average American spends 4.55 hours working on the normal weekday. Participants in work are 58% of the adult population and among these workers the time spent on work related activities averages 7.81 hours."

3 minutes a day? Wow! If us highly religious Americans spend only 3 minutes on average a weekday on religious and spiritual activities, then what is the time spent on religious and spiritual activities in other advanced economies that are less religious?

"This imbalance between work and religious activities on ordinary weekdays is to be expected though the actual figures are stark. One can assume that Sundays will be much different. Sunday is historically the Lord’s Day and a day of rest when government and educational facilities are closed as are many business establishments. Indeed the average American spends a total of 33 minutes on religious activities on a Sunday that is 11 times the amount of a weekday. In fact 25% of Americans attend Sunday worship services; more that 6 times the weekday norm. The average worshipper spends 2.06 hours on religious activities on a Sunday. Sunday is evidently the time for religion but participation at the beginning of the 21st Century is very much a minority interest."

Here again, I wonder what is the time spent on religious and spiritual activities on Sundays in other advanced economies?

"The ATUS findings indicate that the pattern of the traditional American Sunday has changed and the U.S. is becoming a more secular society."

Below are two tables from the paper.

So even on Sundays, religious and spiritual activities are far from the most important activity. In fact, the work category on this 'holy' day is allocated more time. One discussant made the point that maybe these numbers understate/overstate the quality of time allocated to each activity. This point made me wonder if it were possible to have a positive productivity shock to religious and spiritual activities? If so, less time would be needed to generate the same religious and spiritual outcome. Could this possibility explain some of the relatively low share of time allocated to religious and spiritual activities?