Laurence Iannaccone Religious Entrepreneurship

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From Scarcity to Spirituality:

The Consequences of Religious Entrepreneurship *

Laurence R. IannacconeDepartment of EconomicsGeorge Mason University

October 2002

* Very preliminary, based largely on material from a book manuscript (The Economics ofReligion). My work on this paper was aided by grants from the Lilly Endowment, Santa ClaraUniversity, and the Harvard Project on Religion, Political Economy and Society. The workalso benefited from conversations with Barry Chiswick, Carmel Chiswick, and Rodney Stark.Address comments or suggestions to [email protected].


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From Scarcity to Spirituality:The Consequences of Religious Entrepreneurship *

Laurence R. Iannaccone

[H]uman society ... would crumble into nothing if mankind were not generally impressed witha reverence for those important rules of conduct. This reverence is still further enhanced by an opinion ...that those important rules of morality are the commands and laws of the Deity, who will finally reward theobedient, and punish the transgressors of their duty.

Adam Smith, The Theory of MoralSentiments , part III

We owe it partly to mystical and religious beliefs, and ... particularly to the main monotheistic ones, thatbeneficial traditions have been preserved and transmitted. ... [T]he premature loss of what we regard asnonfactual beliefs would have deprived mankind of a powerful support in the long development of the

extend order that we now enjoy, and ... even now the loss of these beliefs, whether true or false, createsgreat difficulties.F. A. Hayek, The Fatal Conceit.

I. Introduction

F. A. Hayek (1988) began his last book, The Fatal Conceit, with a characteristically Austrian-economic assertion that our civilisation depends not only for its origins but also for itspreservation, on ... the extended order of human cooperation ... known as capitalism. But he

continued with the more provocative claim that this order arose from unintentionallyconforming to certain traditional and largely moralpractices many of which men tend to dislike,whose significance they usually fail to understand, whose validity they cannot prove, and whichhave nonetheless fairly rapidly spread by means of an evolutionary selection.

For Hayek, this moral development is perhaps the least appreciated facet of human evolution.The evolutionary process has been cultural rather than biological a relatively recentdevelopment operating through group selection.1 Thus, our moral traditions and customs standbetween instinct and reason logically, psychologically, [and] temporally (Hayek 1988: 23).They postdate, and in many instances contradict, our instinctive impulses (including many of thealtruistic collectivist impulses that humans acquired over millions of years in small hunter-

gatherer societies). They likewise antedate, and cannot be justified by, rational reflection orscientific analysis.

Based neither on instinct nor on reason, the morality of the market (i.e., the traditions, customs,and institutions that nurture and sustain the extended order) would seem too flimsy to survive.Indeed, Hayek (1988) ends his book by asking How could traditions which people do not like orunderstand ... continue have been passed on from generation to generation? Even if group


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I begin with a general theory of supernaturalism, then turn to magic and religion distinct sub-markets that emerge to satisfy peoples demand for supernatural goods and services. Thestructure and products of these two sub-markets prove to be quite different, and the spread ofscience undermines faith in magic much more readily than faith in religion. The final sections ofthe paper focus on religious teachings (such as doctrines of heaven and hell) and social factors

that affect their general popularity.The Economic Approach:

The economics of religion is characterized by an approach rather than a domain of study. Aswith other applications of economics theory (Becker 1976: 5), it rests upon the combinedassumptions of maximizing behavior, market equilibrium, and stable preferences usedrelentlessly and unflinchingly. The approach thus views people as rationalreligious consumers.With an eye toward costs and benefits, they choose how extensively to participate in religion andwhat religion (if any) they will embrace. Over time they may substantially modify their religiouschoices and, hence, their religious activities. They may do so even if their tastes, norms, orbeliefs do notchange. Indeed, the economic approach views most behavior (and mostinterpersonal differences) as rational responses to varying prices, incomes, skills, experiences,technologies, and endowments.

Similar assumptions apply to religions supply side. Religious producers maximize members,net resources, government support, or some other basic determinant of institutional welfare. Theactions of churches and clergy (or denominations and rabbis) are thus modeled as rationalresponses to the constraints and opportunities found in the religious marketplace.

The combined actions of religious consumers and religious producers form a religious marketwhich, like other markets, tends toward a steady-state equilibrium. As in other markets, theconsumers freedom to choose constrains the producers of religion. A seller (whether of

automobiles or absolution) cannot long survive without the steady support of buyers (whethermoney-paying customers, dues-paying members, contributors and coworkers, or governmentalsubsidizers). Consumer preferences thus shape the content of religious commodities and thestructure of the institutions that provide them. These effects are felt more strongly wherereligion is less regulated and competition among religious firms is more pronounced. In a highlycompetitive environment, religions have little choice but to abandon inefficient modes ofproduction and unpopular products in favor of more attractive and profitable alternatives.

II. Origins: Supernaturalism

As the previous paragraphs suggest, standard economic insights have much to say about religion.The economic theorist can posit a demand for (suitably-defined) religious commodities and jumpdirectly to standard insights about production, consumption, supply, demand, cost, benefit,monopoly, competition, regulation, and laissez-faire. Most contributions to the economics ofreligion do just this, sidestepping debates about the true nature of religion, the foundations ofindividual faith, and the structure of religious institutions. (See, for example, Neuman 1986.;Chiswick and Lehrer 1991; Iannaccone 1992)


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A different approach is needed, however, to construct ageneraltheory of religion one withrelevance for many religions, in many times, cultures, and places. To explain the fundamentalfeatures of religious practice and religious institutions, religious commodities must bedistinguished from all other commodities, and the demand for religion must be distinguishedfrom all other demands.

The following paragraphs review a theory of religion that I develop more fully in a forthcomingbook. The theory is by no means complete. It does, however, get beneath the standard givensof economic analysis, working from more basic assumptions about the physical world andhuman nature. It defines religion, magic, and supernaturalism in terms that are broad yetamenable to economic analysis.2 It accounts for the universality of supernaturalism, thedifferences between religion and magic, the appeal of specific religious doctrines, and thetendency for science and technology to displace magic more readily than religion. Thanks to themeticulous work of anthropologists, sociologists, and historians, we can confirm many of thetheorys predictions, drawing from a wealth of historical and ethnographic data concerningprimitive, ancient, and non-Western cultures.

Scarcity, Rationality, and the Demand for Supernaturalism:

The theory presumes a human tendency to identify most everyday phenomena as natural ornormal.

Definition: The SUPERNATURAL refers to forces orbeings beyond or outside this natural

order, which can suspend, alter, or ignore the normal flow of events.

The theory also presumes scarcity and rationality. In the beginning, in the end, and everywherein between, there is no such thing as a free lunch, no escape from scarcity. Humans, however,are not equipped simply to accept scarcity, but are instead driven to satisfy their wants and are

equipped to do so with unparalleled efficacy. The pressures of survival and the powers of theirminds motivate people to defy their apparent destiny and strive for longer, more comfortable,and more meaningful lives. Most efforts fail, but some succeed spectacularly, as with thedevelopment of cooking, hunting, agriculture, writing, and the wheel, or democracy, law,literature, and art, or, in more recent times, physics, biology, chemistry, engineering,mathematics, medicine, and computing. Each of these magnificent inventions may be viewed asa technology to expand our opportunity sets and push back the limits of scarcity.

Against this background, supernaturalism emerges as an alternative technology a natural,understandable, and perhaps even fully rational attempt to enhance individual and collectivewelfare. Supernaturalism posits the existence of mystical powers that transcend the normal

physical limits of everyday life. If it is possible to influence, harness, or benefit from suchpowers, then the supernatural provides yet another way to combat scarcity. To be sure, itsexistence and efficacy eludes positive proof a fact that did not escape the notice of ancientprimitives any more than it has that of modern scientists. But uncertainty cannot quench itsunderlying attraction, for by definition the supernatural holds forth the prospect of otherwiseunattainable rewards.


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Demand for the supernatural can be viewed as a reasonable response to inescapable scarcity,insatiable wants, and irrepressible hope. Supernaturalism confronts humans with the broadestform of Pascals Wager (Pascal 1910, 233). For anyone willing to grant the supernaturalsomeprobability of existence, it almost certainly makes sense to try at least one thing that one wouldnot otherwise do offer prayers (as even most atheists admit to saying), practice rituals, embrace

beliefs, wear charms, worship, meditate, study, dance, chant, conjure, or sacrifice. As withnormal behavior, these acts of religion and magic increase ones expected utility wherevertheir costs are lower than their postulated benefits times the subjective probability that thebenefits will, in fact, arise. Supernatural investments make sense, not just for the credulous,fanatic, and faithful, but also for the hopeful skeptics and cautious agnostics anyone who doesnot know the skies are empty. We thus arrive at a proposition that turns the standard notion offaith on its head:

Conjecture:Rational individuals will seek to understand and influence the supernatural to

the extent that they remain uncertain of its NON-existence.

The point is not to defend supernaturalism, nor discredit it, but merely to emphasize itsunderlying economic rationale and universal attraction.3 Neanderthal and Cro-Magnon man leftcave paintings, burial sites, and carvings that virtually all archeologists take as proof of religiousbeliefs. Every historic culture has left a rich record of supernatural beliefs and practices intemples and totems, traditions and texts, and art and administration. Supernaturalism is no lessuniversal in the hundreds of preliterate societies observed and catalogued by 19th and 20thcentury anthropologists.

Supernaturalism likewise prevails in every society of todays developed world. AlthoughAmericans seem to hold the record for religiosity, with more than 95% professing belief in Godor a Universal Spirit, the supposedly secular populations of Europe maintain remarkably highlevels of faith in supernatural phenomena. In every European country (except the former East

Germany), atheists number fewer than fifteen percent of the population (Jagodzinski and Greeley1997). The resilience of religiosity is nowhere more evident than in Russia, where despite sixtyyears of state-sponsored atheism, bloody church purges, widespread religious persecution, andpervasive secular indoctrination, only eight percent of the people remained atheistic by 1990 andreligious belief is especially widespread among the young (Troyanovsky 1991; Filatov 1993:120).

The vast majority of people find atheism intellectually demanding and emotionally unsatisfying.One must push well beyond the uncertainty of the agnostic or the inactivity of the apathetic, onlyto be rewarded with the absence of hope. No wonder the children of atheists are more likely toabandon their parents beliefs than are the children of any (other) religion (Stark and Bainbridge

1985: 47-48).

An economic perspective thus helps us to understand one of the great predictive failures in thehistory of the social science: the failure of secularization theory. For centuries, scholars haveconfidently, and incorrectly, predicted the immanent demise of religion. With powerful prose,but no real proof, Hume, Comte, Marx, Freud, the Huxleys, and other influential intellectuals,pronounced religion a dying vestige our primitive, pre-scientific past (Iannaccone and Stark1998). Within academia, the media, and most public discourse, this received wisdom sustained a


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large body of stylized facts. For example: that religion must inevitably decline as science andtechnology advance; that individuals become less religious and more skeptical ofsupernaturalism as they acquire more education, particularly more familiarity with science; andthat most members of deviant cults and fundamentalistic sects are victims of indoctrinationor abnormal psychology (from trauma, neurosis, or unmet needs). In contrast, decades of

empirical research, using methods that range from cross-cultural comparisons, to cross-sectionalsurveys, leave no doubt that these generalization are simply false (Stark and Bainbridge 1985;Hadden 1987; Greeley 1989). Throughout the world in Latin America, India, Africa, Europe,the Middle East, formerly communist countries, the United States, and even Israel religioncontinues to flourish, especially its more fundamentalistic variants.

In short, the demand for supernaturalism is as basic and irrepressible as the wants it seeks tosatisfy.

III. Development: Professionalism

What many demand, others will gladly supply. The consumers hope for otherwise unobtainablepayoffs provide ample opportunities for producer profit. Pie in the sky regularly sells for cash onthe barrel. Markets for religion and magic thus develop as naturally as other markets, and soonerin cultural history.

Self-interest and other standard economic forces promote professionalization. Supernaturalspecialists arise to exploit the gains from trade, specialization, and entrepreneurship. Thesewould-be priests, prophets, and seers fan to flame the sparks of faith. Whether prompted byconviction or the lure of profit, prestige, and power, their activities promote belief and shape itsform. Specialization leads, in turn, to institutionalization and product differentiation. Groups ofreligious professionals establish firms and franchises, offering distinctive services, terms of

trade, apprenticeship programs, rites of initiation, and rules of membership. The organizationalfeatures we associate with religion in contemporary Western countries, including congregations,denominations, and clergy, are strictly analogous to those of secular industries.

On the other hand, markets for the supernatural have special features, which trace back to theunique character of their underlying technology. Three deserve emphasis:

First, the market is naturally competitive, with few barriers to entry or imitation, modest returnsto scale, and a range of promised products for which the sky (literally) is the limit. Backed bycoercive power, a single religious firm may dominate the market for legitimate religion, butdiversity and competition almost always persist in an underground economy (as illustrated by

Biblical Israels failure to root out pagan worship or the Medieval Catholic Churchs inability toeliminate witchcraft, heresy, and sect movements).

Second, the market offers a uniquely wide range of products. In principle and practice, nodesire, however large, small, abstract, or specific lies beyond the range of the supernatural.People will invoke the supernatural foreverything. Individually, they will pray (and sacrifice,and chant, and meditate) for physical health, emotional support, information and advice,prosperity, good fortune, favorable weather, protection from enemies, plentiful harvests, life-


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after-death, romance, revelations, and, yes, good sex.4 Collectively, they will also petition thesupernatural for peace, prosperity, domestic tranquillity, victory in battle, and a bright future.And those in positions of power will, regardless of their personal beliefs, will publicly invoke thesupernatural to motivate (or terrify) their subjects, maintain loyalty, legitimate their power, andreinforce the prevailing social order. There is thus no logical limitto the size or scope of

rewards that humans will seek through supernatural means.

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Jeffersonian Deists and Unitarianpreachers may proclaim a distant God, who forswears miracles and magic, but rank-and-filebelievers the world over seem happy to seek every conceivable blessing material or spiritual,miraculous or mundane, specific or general, and here-and-now or by-and-by.

Third and last, the market must address problems of information and uncertainty. The existenceand efficacy of supernatural technologies remain always a matter of faith. The prospect ofotherwise unobtainable rewards (including eternal life, peace on earth, and unending bliss) is tiedto tremendous uncertainty. In the language of economists Darby and Karni (1973), religionoffers the ultimate in credence goods, because no amount of experience (this side of death)suffices fully to evaluate its quality and efficacy. Insights from the economics of uncertaintyhelp us understand the activities and institutions that arise in response to this dilemma. Inparticular, two different strategies for managing risk diversification and specialization arisein both secular and religious markets. As we shall see, the different strategies lead to differentforms of religious organizations (inclusive versus exclusive) specializing in different types ofproducts and different patterns of practice.

IV. Differentiation: Religion versus Magic

Of all the factors that promote product differentiation and sub-market formation in the market forthe supernatural, none are more striking than those that separate religion from magic. These twoconceptions of the supernatural imply two different modes of interaction, leading to differences

in form, content, outcomes, and organizational structure.

Definition:MAGIC refers to beliefs and practices concerning impersonal supernaturalforces or the impersonal manipulation of supernatural beings. RELIGIONrefers to beliefs

and practices concerning one or more supernatural beings.

My use of the words magic and religion parallels that of 19th century anthropologists.Religion consists of beliefs, practices, and institutions that relate to one or moresupernaturalbeings. The one great God of Israel, the many small gods ancient Greece, the ancestral spirits ofChinese Shinto worshippers, and, I suppose, the ghost of Christmas past all qualify assupernatural beings. At a minimum, every such being possesses consciousness and desire in

addition to superhuman powers (Stark and Bainbridge 1987: 82). Magic, by contrast, consists ofbeliefs, practices, and institutions that concern impersonalsupernatural forces or the impersonalmanipulation of supernatural beings. When astrologers cast horoscopes, or athletes carry goodluck charms, or fortune-tellers read the future from a deck of cards, their activities qualify asmagic. Most New Age religion likewise qualifies as magic, be it crystals, pyramid power,palmistry, or mystical auras.6 On the other hand, Las Vegas-style illusions do notqualify asmagic because they are not viewed as genuine manifestations of supernatural power.


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The distinction between religion and magic might seem arbitrary or unimportant just one ofmany ways to divide the supernatural domain. It is not. Humans have no choice but to describethe supernatural world in terms derived from the natural world. No other vocabulary is availableto them. Language, thought, and experience thus lead people to characterize supernaturalphenomena as matters of personal versus interpersonal agency. We can envision other-worldly

forces or other-wordly beings, but thats about it.From an economic perspective, magic and religion yield benefits in fundamentally differentways. Magic involves supernaturalproduction; religion involves supernatural exchange.Production is impersonal; specific inputs, manipulated in specified ways, yield specific outputs.Exchange is, by contrast, interpersonal, a process of communication and bargaining thatinvolves character no less than competence. Here again, magic and religion recapitulate anatural distinction: the two ways humans overcome scarcity in everyday life.

The magical specialist is, by definition, a kind of supernaturally-oriented technician, but atechnician with a problem for by all accounts (scientific, ethnographic, and often evenautobiographic) he wields no truly special powers. Rain dancers cannot influence the weather,Tarot readers cannot see the future, and witches cannot fly with or without their brooms.Although good magicians will hide this fact, perhaps even from themselves, they cannot avoid itsconsequences. And the most important consequence is that when put to the test (a proper testthat is), magic will fail. Magicians must therefore seek to avoid tests.7

The logic of production traps magic. On the one hand, magicians must promote themselves asmasters of the supernatural. On the other hand, they cannot properly account for their failures,except to emphasize their personal limitations or the limitations of the forces they control,neither of which plays well in the market. No magician can fully escape the dilemma:impersonal forces do admit testing, and effective methods for their controlshouldwork ondemand. True magicians should succeed here and not just there, now and not just then. Yet by

all accounts, scientific, ethnographic, and even autobiographical, they do not.

Religion avoids the trap of magic. In a religious system, maximizing humans seek to interactwith maximizing gods supernatural beings with their own preferences. This makes religionless susceptible to refutation, because failure can be explained in terms of the gods autonomyand personality. The implications, as summarized below and in table 1, are immense:

Religious practitioners can ask whereas magical practitioners demand: Humans approach thegods as supplicants listening, petitioning, hoping, and waiting, rather than summoning,compelling, projecting, and manipulating.

Religion can excuse failure while taking credit for success: A priest, pastor, or petitioner canalways counter frustration or disappointment with the thought that God did hear and did answer,but the answer was No.

Religion can focus on the future: The gods are not obligated to deliver on demand or even in thislife. They can take their time, promising only that it shall come to pass (Isaiah 2:2).8

Religion can remain general: The gods can avoid specifics, even as they promise to sustain,nurture, and save.


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Religion, by contrast, has much less trouble coexisting with science. It persists, not because itcan be proved to work, but because it cannot be proved to notwork. It remains attractive, notbecause it looks like good science, but because its approach and claims are so obviously distinctfrom those of science. Having already analyzed the relative strengths of religion over magic,particularly its resistance to refutation, it suffices draw the obvious conclusions:

Conjecture:As people become better acquainted with the character and content ofscience, the methods of magic come to look more and more anti-scientific. The spread of

science thus tends to undermine faith in magic but does little to reduce faith in (non-magical) religion.

Together, the two observations above suggest a new and modified form of the secularizationhypothesis:

Conjecture:As science and technology grow, the relative status (and, probably, absolute

prevalence) of magic will tend to decline. The status and prevalence of religion need notchange, however, although its overtly magical aspects will tend to diminish.

Historical accounts appear to support this generalization. See, for example, Keith Thomas(1973) study tracing the decline of magic in England. Changes in Catholic doctrine and practice,from medieval times through the present, follow a similar path. D. Michael Quinn (1987)(zz)documents the prevalence of magic in 18th and 19th century America (as opposed to moderntimes). Change even appears within American Protestant denominations, whose Colonial andfrontier churches promoted many magical teachings and practices that their successors nowutterly reject.

Quantitative data seem also support the argument. As I have noted elsewhere (Iannaccone andStark 1998), virtually all time series data refute the notion that religious commitment and

religious involvement have declined over time (as education, income, or familiarity with sciencehas increased). There thus there appears to been no decline in religion that parallels the declinein magic. Moreover, contemporary cross-sectional surveys, such as Gallup polls and NORCsGeneral Social Surveys, almost never find a significant negative relationship between measuresof religiosity (such as church attendance and belief in God) and measures of income, education,or familiarity with science and technology. In contrast, however, people with higher levels ofeducation do display less belief astrology and other popular forms of magic.

Recap: Sections I - IV

The general theory of supernaturalism refutes once and for all the common complaint thatrational choice models have little relevance beyond the consumer cultures of the developedWest. Indeed, our brief forays into the anthropology of religion and magic in non-Western andprimitive societies suggests that the economic perspective may be even more relevant in thesesocieties than it is to Christianity, Islam, and Judaism the great monotheistic religions of thecontemporary West. Ironically, it is Western monotheism that is, in principle if not in practice,most hostile to the simple economic notion that through religion, humans may trade with god(s)in order to accumulate current and future material benefits. Although thinly veiled trade still


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exists within Christianity, Islam, and Judaism, materialism is routinely denounced (again, inprinciple, if not in practice) and Gods terms of trade are carefully nuanced.

Economic considerations help us understand why supernaturalism persists in every known timeand place. They likewise help us understand the emergence of religion and magic as contrasting

orientations toward the supernatural. The different orientations imply that, despite their apparentsimilarity, magic tends to be more refutable than religion and its institutions more fragile. Inpractice, religion and magic will tend to concern themselves with different problems, and themarkets for religion and magic will be structured very differently. Most importantly, magicianswill not establish churches or congregations, merely collections of clients, whereas religion willabound in churches, drawing their strength and numbers from the moral communities thatreligion can sustain.

The theory also addresses the relationship between science and supernatural, and leads to animportant prediction: scientific advance will tend to undermine magic far more readily thanreligion. Although this scaled-down variant of traditional secularization theory lacks theboldness and scope of its predecessor, it does at least enjoy the advantage of empirical support.

In sections to follow, I will extend the theory of religion and show certain doctrines tend topredominate in religious markets. There are, for example, very good reasons why most religionsoffer their best clients large afterlife rewards. Conversely, afterlife penalties, while not the leastbit attractive to those on their way to Hell, can be of use in constraining peoples behavior andwill, for this reason, be promoted by various groups and elites. Having traced the appeal ofcertain doctrines to the characteristics of individuals and groups, we can also explain theconditions under which one type of doctrine gives way to another, including the conditions thathave led contemporary Christians to largely reject the traditional view of Hell.

V. The Market for Doctrine:Teachings That Sell, Pay, and Evolve

Within all religious traditions, but especially those known for their tendency to create moralcommunities, doctrines concerning Gods will provide the foundation for numerous demandsand activities. Such teachings are usually sold in terms of their benefits to the religiousconsumer (though the terms of exchange are rarely stated as such). We turn now to the marketfor such teachings, focusing as always on perceived costs and benefits, and starting with adefinition of doctrine precise enough for economic analysis, yet broad enough to cover mostactual religious teachings.

Analyzing Doctrines

The typical religious teaching is an assertion or assurance of the form A leads toR, whereAspecifies a set ofactions (including, perhaps, subjective attitudes) to be undertaken by thesupplier and/or demander, and whereR is the promised set ofresults. The action A might thusbe lay a sacrifice at the foot of the god Zogar, and the result R might be an increasedprobability of a good harvest. Formally, we may denote any such assertion with the symbol,[A,R]. Although this semantic structure characterizes virtually all cost-benefit assertions,


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whether secular or supernatural, our interest centers on religious assertions, which by definitionconcern results achieved through divine agency.11 The validity of most religious assertions is, aswe have seen, difficult or impossible to determine since the promised results will usually dependupon the consent of god(s), involve very general benefits, and/or occur in the distant future.12

To reduce all doctrine to assertions of the form [A,R] is, of course, a simplification, but not asgreat a simplification as might at first appear. Religious statements come in many forms, as thefollowing examples illustrate, but most are at least implicitly equivalent to [A,R] assertions.Consider, for example, the following broad classes of statements:

1) Cause and Effect: These statements fall directly within the [A,R], action/resultframework. They arise whenever a religious authority demands or advises an act orattitude so as to produce a valued outcome (or discourages an act on the basis of itsharmful consequences).13

2) Predictions and Promises: Though superficially unconditional, and thus of the form RwithoutA, most religious predictions and promises involve implicit demands for future

action, warnings against inaction, or assurances that R is the reward for some previousaction.14

3) Simple commands and exhortations: Here the statements form seems to be A withoutR.Closer reading, however, of the text or subsequent interpretation almost always reveals apromised result that justifies, motivates, or accompanies the command.15

4) Simple declarations: Even most (semantically) simple declarations fit the [A,R] modelinsofar as they exist to build faith. Whether by original intent or subsequentinterpretation, the matter-of-fact, historical statements within most religious texts andtraditions fulfill this function.16

In short, regardless of their explicit form and perhaps even regardless of their original intent, thestandard interpretation of a religious statement can almost always be expressed in [A,R] form.Thus, [A,R] assertions are the bread-and-butter of religious texts and teachings. This is hardlysurprising, for as we shall see below, religious consumers are not likely to buy a doctrine thatoffers no results or unsatisfactory results, nor are religious producers likely to sell a doctrinethat stipulates no actions.

Evaluating doctrines: In the market for religion, success inevitably depends on developing anappropriate set of teachings, backed up by appropriate rituals, requirements, organizationalstructures, all of which vary depending upon the religions history and customer base. It is clear,however, that some religious assertions are inherently better suited to survive the market test atest which requires, at minimum, both willing buyers and willing sellers.

The preacher-sellers: In any society there will exist people who have the opportunity to promotereligious assurances of the form [A,R]. In competitive religious markets, such as that of theUnited States, all citizens have the right to promote their religious beliefs. In more regulatedenvironments, such as medieval Europe, the right is far more restricted. In any setting, however,the promoter makes a sale whenever some other person agrees to undertake the action, A, inthe hope of receiving the promised result, R. The required action will usually involve activities


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on the parts of both seller and the buyer. For example, a disciple-buyer may pay the priest-sellerto petition the gods for a good harvest.

The buyer-adherents: Rational consumers will evaluate religious assertions in terms of theirexpected costs and benefits. The relevant costs are, of course, those that the buyer incurs byundertaking his or her part of the required action, A. Let the symbol C(A) designate theperceived magnitude of these costs. The magnitude of benefits will likewise depend on the valueof the promised reward, R, but also on theprobability, , that this reward actually materializes asa result of the action, A. The expected value associated with the assertion [A,R] is thus V(R) -C(A).

In most settings, a person also ascribes less utility to a more risky prospect, even when themagnitude of the payoff and probability of payoff are offsetting. To incorporate risk aversion ina formal model of doctrine, it suffices to assume that buyers evaluate doctrines not merely interms of their expected payoff, but rather in terms of their expected utility.17

Doctrines that Sell

Although the complexity of most real-world doctrines makes it difficult to assess their costs andbenefits, we can identify major classes of doctrines that will notsurvive market pressures. Forexample, there will be no market for assurances, [A,R], whose required actions are more costlythan the promised results. To be specific: a priest may be correct that a whole-burnt offering oftwo cows will cause the gods to bless your one remaining cow with more milk, but right orwrong this is not the kind of teaching that will attract a following. Similarly, there will be nomarket for assurances whose costly actions are promised to yield no results at all or onlyundesirable results. (Doctrines of eternal punishment, an apparent contradiction to this rule, arediscussed at length below.) In short:

Conjecture: Religious teachings will emphasize promises of beneficial results.Moreover, these results will principally benefit the buyer-adherents and those closest tothem.

The implications of a cost-benefit approach to doctrine are not always obvious. The followingextended example demonstrates an important principle:

Conjecture:It is not enough for a religion to promise large rewards, even if its potentialcustomers believe the promise. A successful religion must offer an appropriate rewardgradient, so as to guarantee greater payoffs to its more dedicated adherents.

To understand the basic argument, imagine a religious market consisting of three competingchurches. The first, The Church of Conditional Salvation, demands a specific lifestyle A1 thathas observable, here-and-now opportunity costs, C1. It also teaches that those who join thechurch and abide by its teachings will be rewarded with a blissful life after death worth R1,whereas those who reject church and its teachings will suffer afterlife penalties, P1 (where P1 < 0< R1).

18 The second church, The Church of Universal Salvation, advocates a lifestyle costing C2and promises a blissful afterlife, R2. Unlike the first church, however, it believes in an infinitelyloving God who will somehow save all (or nearly all) humans regardless of their behavior in this


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respectively) contingent upon membership and behaviors (costing C1 and C2, respectively). Eachalso threatens its nonmembers with punishments or lesser rewards (P1 and P2, respectively). Itfollows from the analysis of figure 4.1, that that potential members will tend to choose onechurch over the other: the higher its netafterlife benefits (R-P), the lower its lifestyle costs (C),and the more plausible (i.e., the more subjectively probable) its claims to truth.

Leaving issues of cost and plausibility, we obtain the following important conclusion:

Conjecture: Religions face a strong inflationary incentive to promise huge afterlife

payoffs net of afterlife punishments.

Truly, the sky is the limit, since no one can prove them wrong. Traditional Christian theologyprovides a prime example, offering faithful members eternal bliss the highest conceivablereward while threatening heretics and heathen with the greatest possible punishment eternaltorment. Entrepreneurial suppliers of religion are thus led, step by step, to Heaven and Hell ortheir doctrinal equivalents pie-in-the-sky and fire below.

My analysis of salable doctrines is, of course, oversimplified and incomplete. Yet the results aresuggestive, and surprisingly predictive, just the same. Let us turn therefore to the other side ofthe market, and consider which doctrines are most attractive to the churches that produce them.

Doctrines that Pay

Costs and benefits shape the supply side of a religious market just as they do the demand side. Inparticular, they constrain the supplied content of religious teachings, since no doctrine willattract many preacher-sellers if it does not benefit them as well. Otherwise, why should thesellers bother to expend resources trying to convince potential buyer-adherents that the doctrine

is true? Even if most preachers are so saintly as to rise above self-interest (a rare and difficultfeat, even among Gods servants), and even if they are willing to preach a particular doctrinegratis, how can market their message how can they disseminate it effectively unless theyobtain resources from those they have convinced? Even it is true that God blesses believers whomail all their contributions to competing denominations (and I for one have always believed itis), a church that preaches such doctrines will rarely survive, much less prosper. Here again weobserve a kind of invisible hand at work, guiding the market toward self-serving doctrines:

Conjecture:No matter how much a doctrine appeals to demanders, it must also attractpotential suppliers. Successful doctrines must therefore generate beneficiaries who willeither promote the doctrines themselves or else finance or force others to do so for them.

Implications and examples:[Notes: In religion, as in other enterprises, inefficiency and purealtruism are the exceptions, not the rule. And even the gods (as distinct from their promoters) donot receive much in the way of sacrificed resources. Most sacrificial offerings are, in fact,dividedbetween the priest and the petitioner, with little more than the smoke, intestines, andburned fat reserved for the gods. Examples of cost-conscious sacrifice abound, not only in theHebrew Torah, but also in many other religious traditions. In many respects, Christianity loweredthe price of admission further still, requiring no physical sacrifices at all, not even the traditionalJewish sacrifice of circumcision. This is, however, an overstatement, since early Christianity


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and many subsequent Christian orders and sect movements instituted their own, high-cost life-style demands (such as poverty, celibacy, and absolute obedience). How they managed tosucceed, and continue to manage, is the primary subject of Iannaccone (1992; 1994). Potlatchand apparently gratuitous sectarian demands thus deserve attention, not because they typical ofreligion, but precisely because they appear to violate the general pattern, which might be called

dollars from donors, but pennies for heaven.]The supply side perspective: The economic approach continually reminds us that religiousoutcomes, like those of all other markets, reflect the activities and interests of both demandersand suppliers. This contrasts with traditional religious scholarship, which has all but ignored thesupply-side of the religious markets, thus leading researchers and the media to erroneouslyinterpret all manner of religious trends and innovations as the consequence of psychic shifts orsocio-economic upheavals (including the so-called Great Awakenings of the 18th and 19th century America, the rise of New Religious Movements in the 1960s and 70s, and theexplosive growth of Protestantism in Latin America). For more on this, see (Iannaccone,Finke et al. 1997). Here, it suffices to emphasize the critical role played by religious suppliers ofall kinds the mainstream suppliers/clergy who staff conventional churches and satisfy mostcurrent religious demand, the advertisers/evangelists who market religion to lapsed or potentialconsumers, and the innovators/cult leaders who build demand for entirely new religiousproducts.

[An aside on the problem of plausibility (developed more fully in my book): The plausibility of ateaching (as indexed by the perceived probability of reward, , is central to our theory since itdetermines the expected value associated with promised results, R. It comes, therefore, as nosurprise that all religious traditions emphasize the importance to faith. More importantly, allreligious suppliers work to enhance the plausibility of their products. Standard ways to enhanceplausibility include: testimonials, collective activity, evidence of commitment on the part of theseller, emotionally-charged meetings, childhood indoctrination, social ties to those who already

believe, and the use of powerful images (derived from narrative, myth, ritual, drama, or poetry).]

Application: The decline of Hell

The Christian doctrine of eternal torment would seem to contradict the preceding predictions. Itfact, however, both the doctrine and the social conditions that sustain it are well within thetheorys scope.

The puzzle, of course, is why anyone would buy into a church or church doctrine that threatensmembers with the prospect of, to put it mildly, very large negative rewards. (Note that the issue

here is not the presence of what I have termed a reward gradient, which offers more to devotedmembers than casual members or nonmembers. The issue concerns the horrifyingly large,absolute losses associated with Hell.)

The solution probably lies within the realm of group dynamics, wherein people choose not onlyfor themselves but for others as well. Although no religious adherent wishes to buy Hell forhimself, he may well appreciate its use as a threat against others. Above and beyond Hells


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value in establishing a reward gradient as described above, the threat of afterlife punishmentmay benefit:

n Parents trying to raise loyal children,

n Governing elites trying to maintain a loyal citizenry,

n Economic elites trying to reduce the threat of theft and shirking among theirworker and tenants, and

n Religious elites trying to reduce defection from their religion.

It is not hard to see why any or all of the former groups might be willing to pay to put the fear ofHell into members of the latter groups (see Becker 1996:227 for a similar argument). Theymight even be willing to live with increased fear among themselves as long as they thereby raisethe level belief and fear in others. This last point is important, for it helps us understand howself-interested people mightgenuinely accept a doctrine that, viewed merely at the individual

level, reduces their anticipated utility.

Where Hell no longer serves these functions or is no longer needed to serve them, then itspopularity should decline (since it continues to threaten the buyers with the disturbing prospectof personal damnation). For example, as greater personal wealth and the welfare state leaveparents less desperate to constrain their childrens behavior and ensure their long-term loyalty,parents will become less anxious to expend resources teaching their children about Hell.22Likewise, certain political changes such as increased democracy, religious freedom, and theseparation of church and state tend undermine the governing elites capacity and desire toindoctrinate, regulate, and legitimate through this or any doctrine. These arguments about Hellembrace a bit of the old Marxist religion-as-opiate thesis, but also much more.

New conditions may also alter Hells intrinsic plausibility. For example, people may be lessinclined to believe in damnation (or more precisely, in a God who would punish people withsuch torments) as conditions in this life become less hard and, especially, as parents, employers,and rulers treat their subordinates less harshly.

Finally, Hell becomes less attractive as societies become more religiously diverse. The notionthat torment awaits all non-believers yields less utility when such people include friends, co-workers, and family members (and it takes a truly terribly marriage to make a husband relish theprospect of his mother-in-law burning forever in Hell). We might even say that the roadfromHell is paved with good intentions good intentions, that is, toward those who might otherwisesuffer its pains.2324

Evidence: Historical data tend to support the predictions above. For example, content analysesof American sermons track a dramatic decrease in reference to Hell and damnation over the pasttwo centuries [cite]. (Ekelund, Hbert et al. 1996) argue that the medieval Catholic churchmanipulated the doctrines of hell and purgatory to enhance their power and wealth. [Conjecture:The Christian doctrines of eternal torment became more elaborate and more widely accepted asthe mobility and pluralism of the Greco-Roman world gave way to the medieval European worldof isolated small, static, and religiously-homogenous towns.] Finally, there exist relevant survey


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data, including GSS or Gallup, that indicate how attitudes toward Hell vary with the respondentssocio-economic status. At the level of organizations rather than individuals, it appears that theafterlife teachings and doctrinal emphases of different denominations do correlate, in theanticipated directions, with the average socio-economic status of their members (after controllingfor purely historical doctrinal effects). Thus, denominations with richer and more educated

members abandoned the emphasis on hell sooner and more thoroughly than those whosemembers tend to poorer and less educated.

Recap: Section V

Although the theory of religious teachings sketched out above is far from complete, it doesprovide a new and useful way to define, analyze, and compare different doctrines. Indeed, theframework of this paper constitutes the first serious attempt to develop social-scientific theory ofreligion and religious doctrine amenable to formal modeling and mathematical analysis.

As a practical matter, the theory helps us recognize, several things. First, most religious

teachings have a common (action/result) underlying structure. Second, peoples religiousbehavior seems broadly consistent with the notion that they evaluate religious teachings in termsof their anticipated costs and benefits and, where possible, choose to follow those teachings thatoffer higher net returns. Third, religious doctrines will not flourish unless they some manage togenerate net benefits for both sides of the market the buyer-adherents and seller-clergy.Fourth, competition and the untestable character of afterlife claims leads religious suppliers tooffer their members huge afterlife payoffs. Fifth, in the market for members, high these highpayoffs to members must be coupled with much lower payoffs to non-members, or else potentialmembers will have little or no strategic incentive to join the religion. Sixth, and last, memberswill tend to embrace the threat of religious penalties, including large afterlife penalties, if thethreat functions to constrain the behavior of people with whom they interact. To put it more

bluntly, people may buy into the doctrine of Hell if they can thereby scare the Hell out ofothers. Hells decline in the face of increased material comfort and social diversity is a strikingimplication of the theory, and an interesting case of pluralism undermining one traditional aspectof (Christian) religion without necessarily reducing religiosityper se.

Conclusions

For more than two centuries, academics confidently predicted (and often enthusiasticallyproclaimed) the immanent demise of religion the victim progressive and irreversiblesecularization whereby all forms of supernatualism withered before the advance of science and

rationality. With the benefit of hindsight, not to mention mountains of data, it now appears thatsecularization theory never had much evidence, let alone any real theory, to justify its broadclaims. Religious beliefs and activities remains popular with large portions of the population inmost parts of the world, and religious institutions remain influential for good or ill nearlyeverywhere. And if Hayek is right about the historic functions of religion, this outcome may notbe such a bad thing. Humans may still require religions to sustain their collective faith in themoral customs and traditions that provide the foundation for a market-based civilization.


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In any case, an economic perspective sheds new light on the underlying demand for religion andthe diverse forms of supply that arise to satisfy it. Economic concepts and categories extendquite naturally to the realm of religion in part because economic concepts and categories (such ascost and benefit or production and trade) are fundamental to all human activities. But theextension is also facilitated by the fact that market institutions and activities are not as radically

unlike religious institutions and activities as people normally assume. (For example, monetarytransactions are more common in the realm of religion and magic than most contemporaryAmericans realize. Exchange is fundamental to the functioning of both realms, as is trust inones exchange partners and the mediums of exchange [forgive the pun]. In both realms,competition, imitation, innovation, and entrepreneurship are pervasive unless forcefullysuppressed. And both religions and markets are emergent institutions, developingspontaneously and unpredictably over long periods of time, and arising out of innumerableexchanges and activities calculated to promote the interest of individuals, but ultimately affectingmuch larger groups.)

Ultimately, of course, the economic approach to religion must be judged by capacity to advanceour understanding of beliefs, behavior, and institutions. This paper is designed to illustrate that itdoes just that.


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Endnotes:1 For a discussion of group selection, see Field (Field 2002) who notes that only three othereconomists Hirschleifer, Samuelson, and Becker acknowledged the importance of groupselection prior to the 1990s.

2 Many elements of the theory are present or presaged in two seminal works by Rodney Starkand William Sims Bainbridge (1980; 1987). See also One True God, Starks (2001) recentlypublished study of the historical consequences of monotheism.3 My argument for the universality of supernaturalism is fundamentally different from, thoughnot entirely inconsistent with, the evolutionary account put forth by Pascal Boyer (2001).4 The day after writing this sentence, I happened to visit a Christian bookstore where Iencountered shelf upon shelf of Christian self-help literature, including hundreds of books ongetting out of debt, disciplining children, coping with death, healing, mother-daughterrelationships, addiction, retirement, cooking, exercise, home-schooling, adoption, dating,divorce, marriage, and, yes, sex. One particularly striking volume,A Celebration of Sex (xxx

199x), carried the subtitle A guide to enjoying Gods gift of married sexual pleasure.5 This conclusion contrasts with that of most early-to-mid twentieth-century sociologists andanthropologists, who sought to define, explain, and analyze religion in terms of its supposedfunctions, most notably social integration (e.g., Durkheim, Radcliffe-Brown, Malinowski,Parsons, and Yinger).6 Magical elements are, to varying degrees, present in all religious traditions. OrthodoxCatholicism, with its emphasis on miracles, saints, and relics, is considerably more magical thantraditional Protestantism, which emphasized faith and Biblical teaching above all else. ReformJudaism is considerably less magical than Hassidic Judaism.7 My analysis of magic has benefited from numerous studies of magic by cultural anthropologists

(such as ). It has also benefited from McCloskeys (1990) perceptive and entertainingdiscussion of the poetics and economics of magic. McCloskey does not, however, developwhat one might call a theory of magic, much less a formal model, since he is writing todemystif[y] economic theory and rescue its wisdom from the pretensions of experts bystressing that models are metaphors, theories are stories, and [s]cience is rhetoric, all the waydown [McCloskey 1990: dust jacket].8 Except where otherwise noted, all biblical quotations come from the New International Version(International Bible Society 1988).9 This conclusion recapitulates Durkheims (Durkheim 1965: 59, 44-45) famous observationscontrasting religion and magic, which went so far as to define religion in terms of its collectivedimension. According to Durkheim, In all history we do not find a single religion without a

Church It is quite another matter with magic. The magician has a clientele and not aChurch, and it is very possible that his clients have no other relations between each other, oreven do not know each other A Church is a moral community . But Magic lacks anysuch community.10 [Review and cite Voltaire, Spencer, Marx, Freud, Huxley, Wallace, Dobbelaere, etc.]


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11 My model of assertions includes Stark and Bainbridges (1980; 1985: 6; 1987: 36)compensators as a special class of [A,R] assertions in which the results are highly generaland/or future-oriented.12 An aside on evaluation costs: To formalize this notion, we imagine a cost function, C(.),

defined over the set of all possible assertions {[A,R]}. By definition, C([A,R]) denotes the costof evaluating the truth or falsity of assertion [A,R]. Religious assertions tend to have very highevaluation costs. The same, however, is true of many secular goods, such as the forms ofmedical services, psychological counseling, and investment advice that economists callcredence goods (because their value can scarcely be determined even aftertheir consumption).For those concerned that no assertion can ever really be proved, we might take a moreBayesian approach and let C([A,R],p) denote the cost of arriving at an evaluation that one viewsas correct with probability p. Thus, C([A,R],.95) denotes the cost of becoming 95% sure that[A,R] is or is not true. [Include more here on the difference between search, experience, andcredence goods?]13 Biblical examples include: Honor your father and your mother, so that you may live long in

the land the Lord your God is giving you (Exodus 20:12), Ask and it will be given to you; seekand you will find; knock and the door will be opened to you (Matthew 7:7), and Repent and bebaptized and you will receive the gift of the holy spirit (Acts 2:38).14 Consider, for example, Gods famous promise to Abraham, reiterated in numerous texts: Iwill make you into a great nation and I will bless you; I will make your name great (Genesis12: 2). This apparently unconditional blessing is, in fact, linked to Abrahams faith in God, as iseach subsequent repetition or elaboration of the promise (as in Genesis 15:1-6 and 22:15-18).More importantly, Jewish and Christian interpreters of these texts have for thousands of yearsviewed them as proof that God rewards faith and keeps His promises (e.g.,Romans 4:16-25,Hebrews 11:8-12, 17-19).15 Most of the Bibles ten commandments illustrate this form of statement: You shall have no

other gods before me. Remember the Sabbath day by keeping it holy. You shall notmurder. You shall not commit adultery. You shall not steal. You shall not give false testimony You shall no covet (Exodus 20:3, 8, 13-17). The relevant promise is nearby, in Exodus19:5: Now if you obey me fully and keep my covenant, then out of all nations you will be mytreasured possession. Note also the no-so-implicit threat inExodus 15:26: If you listencarefully to the voice of the Lord and keep all his decrees, I will not bring on you any of thediseases I brought on the Egyptians, for I am the Lord, who heals you.16 For example: In the beginning, God created the heavens and the earth. (Genesis 1:1).

In the beginning was the Word. Through him all things were made; (John 1:1-3)

The message of these texts is no less clear, though certainly less crude, than that of the

evangelical bumper sticker they inspired: God and Son, Inc. doing business with folks likeyou for thousands of years. Indeed, religious narrative almost always exists to promote faith inthe religion and its assertions. The previously-cited book ofJohn is especially up-front about thisfact: Jesus did many other miraculous signs in the presence of his disciples, which are notrecorded in this book. But these are written that you may believe that Jesus is the Christ, the Sonof God, and that by believing you may have life in his name. (John 20:30-31).


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17 The consumers goal then becomes the maximization of a risk-averse expected utility functionEU, evaluated over the costs and benefits associated with all his activities. Letting I denotedthe magnitude of value associated with all activities except [A,R], his objective function may bewritten: EU[V(R)-C(A)+I].

18 In terms of the framework described above, the church teaches two complementary assertions:[A1,R1] and [not-A1,P1], with C1 = C(A1) and P1 < R1.19 For the sake of generality, I have designed the printed matrix to accommodate any set ofchurches, numbered 1 through n, and to track two other factors the observable, here-and-nowbenefits, B, associated with membership in each church and the subjective probability, , that theperson assigns to the truth of each church.20 It is not difficult to extend the formal model of religious choice so as to also accommodatechoices concerning how much time and money to devote to religion, and which takes account ofthe interplay between an individuals assessment of costs, benefits, and probability and theactivities of his or her fellow members. This general model plays a major role in my book, The

Economics of Religion.21 The son of the famous atheist-activist, Madeline Murray OHare, is merely the best-knownrecent example. This one-time child plaintiff in the court case leading to abolition of schoolprayer in 196x now writes books and routinely appears on TV, radio, and other public forums torenounce his atheistic upbringing and promote Christianity.22 One must consider both the income and substitution effects at work here, but the basicintuition seems sound.23 This argument also applies to 19th-century disputes over the doctrine of Predestination, whichseemed much more fair in tight, religiously homogeneous societies where most everyone wassupposedly among the elect (Finke 19xx). Likewise, as knowledge of and sympathy for people

outside the West has grew, Christians became increasingly concerned about the damnation ofunbaptized children and ignorant heathens.24 Should we view this as an example of secularization la Peter Berger (1967)? Only if we canshow that this doctrinal change amounts to reduced religiosity.


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APPENDIX

Prices, pleasures, promises, and plausibility

a formal model of church choice and religious involvement

Leti = actors choice(s) of churchj = the true church/true state of the world

and letX = the actors church-related activitiesS = the actors stock of religious preferences/experiencesSchu = the churchs (median or mean) stock of religious preferences/experienceSref = the religious preferences/experiences of the actors reference group

C = opportunity cost of the actors church-related activitiesR = the expectedmystical (future + current but unknowable) rewards/punishmentsB = here-and-now, observable benefits from church participation = subjective probability that a given churchs R-claims are true.

thenEU = utility from nonreligious activities +

j{ j(Si,Sref,Schu) Rj(Xi,Si) } + Bi(Xi,Si,Sref,Schu) - C(Xi)(credence benefits) (observable benefits) (opportunity costs)

By assumption, Si is a function of the Xi and Si from previous periods and perhaps alsothe Sref and Schu from previous periods.

In this model, subjective probabilities, expected rewards, observable benefits, andopportunity costs all vary continuously as a function of the actors religious activities andpreferences and/or experiences and the preferences and/or experiences of his referencegroup(s) and his church. The game- theoretic payoff matrix in figure 4.1 is a simplifiedvariant of this model in which all the payoffs and probabilities are fixed.


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Figure A.1Choosing your Church:

Game-Theoretic Matrix of Expected Payoffs

State of the

world

Subjective

probability

Join

church 1

Join

church k

Join

church j

Join

church n

Join

none

1 is true 1 R1+B1-C1 P1+Bk-Ck P1+Bj-Cj P1+Bn-Cn P1

k is true k Pi+B1-C1 Rk+Bk-Ck Pi+Bj-Cj Pi+Bn-Cn Pi

j is true j Pj+B1-C1 Pj+Bk-Ck Rj+Bj-Cj Pj+Bn-Cn Pj

n is true n Pn+B1-C1 Pn+Bk-Ck Pn+Bj-Cj Rn+Bn-Cn Pn

none is true 1i B1-C1 Bk-Ck Bj-Cj Bn-Cn 0

Deriving the payoff formulae:

Let k denote any church and let j denote the particular church to which a person adheres

(j,k=1,2, n or none). Let Rkdenote the unverifiable (e.g., afterlife) reward associatedwith adhering to church kifit is true, and let Pkdenote the unverifiable penalty associatedwith notadhering to church k if it is true. (Pkneed not be negative, and is more properlytermed an alternative payoff.) Let Bkand Ckdenote the observable, here-and-nowbenefits and costs associated with adhering to church k. Finally, for each church k, letkdenote the subjective probability that the person assigns to church k being true. It followsthat the persons total payoff will be Rk+Bk-Ck if j=k, Pk+Bj-Cj if jk, Pk if he adheres tono church (j=none), and Bj-Cj if no church is true (k=none).

The matrix above indicates the full set of such payoffs, with rows corresponding topossible true churches and columns corresponding to the persons possible choice of

churches. To obtain the expectedpayoff associated with any particular church choice, j,the individual works down the corresponding join church j column, multiplying eachcells payoff by its associated probability and then summing over all possiblities (k = 1,2,,n, none). For jnone, the resulting expected payoff is Bj-Cj + kj(kPk) + jRj.For j=none, it becomes kj(kPk). And for k=none, but jnone, it becomes Bj-Cj.


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Becker, G. S. (1976). The Economic Approach to Human Behavior. Chicago, Universityof Chicago Press.

Becker, G. S. (1996). Accounting for Tastes. Cambridge, Harvard Unversity Press.Berger, P. L. (1967). The Sacred Canopy. Garden City, NY, Doubleday.Boyer, P. (2001). Religion Explained: The Evolutionary Origins of Religious Thought.

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Fraud." Journal of Law and Economics 16(1): 67-88.Durkheim, E. (1965). The Elementary Forms of the Religious Life. New York, NY, Free

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Hayek, F. A. (1988). The Fatal Conceit: The Errors of Socialism. Chicago, University ofChicago Press.

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Iannaccone, L. R. (1994). "Why Strict Churches are Strong." American Journal ofSociology 99(5): 1180-1211.

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Iannaccone, L. R. and R. Stark (1998). "Rationality and the 'Religious Mind'." EconomicInquiry 36(3): 373-389.

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Troyanovsky, I., Ed. (1991). Religion in the Soviet Republics. San Francisco,HarperCollins.

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