Alumnus Finds Intersection Between Economics and Religion

by Amy Marcott on November 5, 2010 · 2 comments

in Alumni Life, Economics

Gordon Hanson. Credit: UC San Diego

Alumnus Gordon Hanson teaches economics at UC San Diego, but religion has been on his mind a lot lately (and not just because of the mettle-testing quakes in the U.S. economy). In a paper titled, “Exporting Christianity: Governance and Doctrine in the Globalization of U.S. Denominations,” Hanson PhD ’92 finds an intersection between economics and religion by treating religious denominations, specifically U.S. Protestant denominations, akin to multinational enterprises that decide, based on local market conditions and their own productivity, which countries to enter.

At a talk on campus several days ago, Hanson said the big question he and his colleague Chong Xiang, co-author of the paper and professor at Purdue University, sought to address was: “What are the observable features of denominations that account for their differential success in expanding abroad?”

Why should we care? According to Hanson:

  • The phenomenon is large. In 2010 Pentecostalism, along with other so-called “renewalist” groups, had 600 million adherents worldwide.
  • Expansion of Protestant Christianity can challenge religious and political elites by creating a more competitive religious marketplace.
  • The capacity of the state to provide social services may affect demand for religion.
  • If you’re into econ, you may interested to know that Hanson and Xiang applied recent theoretical developments in organizations and international trade to their inquiry.

Hanson and Xiang found that denominations with a decentralized governance structure (where the local pastor has control rather than a national or international governing body) have larger membership in countries in which the productivity of pastor effort is higher. Part of this is because one of the pastors’ primary duties is to connect; face to face interaction is very important. The quality of a country’s transportation system and communication infrastructure affects pastor productivity and success. So in countries where pastors have access to good transit and communication networks, their productivity tends to be higher. And as a result when they serve as the main leader, as is the case in decentralized denominations, membership is larger.

Hanson and Xiang also found that denominations with stricter religious doctrine have larger membership in countries in which the government provides fewer social services and the risk of adverse shocks is greater. This follows if one thinks of religious denominations as being like clubs that produce quasi-public goods; goods can include worship services, educational activities, charitable undertakings, etc. If government provision of social services is lacking, then it makes sense that people might be more inclined to connect with religious groups. Work by economist Laurence Iannaccone also suggests that stricter religious groups are more efficient in organizing the collective production of quasi-public goods.

If their findings strike you as unsurprising or slightly intuitive, you may be more impressed by their math and modeling–which is too complicated to unpack in detail here but still warrants mention. To discern the utility for person i in country k from participating in denomination j in local market m, Hanson and Xiang came up with the following:

Their paper continues with roughly ten more pages of equations and calculations.

Interested? Contact us here at Slice if you want to read more.

{ 2 comments… read them below or add one }

John Evans November 5, 2010 at 2:42 pm

I hope they’ll let us know if they get contacted by a Mr. Hari Seldon who’s interested in their work.

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Paul "Math Worksheets Man" Riels December 1, 2010 at 6:25 am

I find it very interesting that the traditions of our culture can dictate our affinity to religion.

I always thought that it was due to a sense of “forced community”. If we are suppressed, we would follow our nature (social animals)and join the group.

These finding lead me to believe that it might be more of an infrastructure issue.

The atheistic movement has been making a push over the last decade. Many people believe it is due to our increased intellect. I would now disagree and say it might be a result of high quality infrastructure. There is only so much time in the day, can we fit god into it?

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