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Economic Growth: The Effects of Religion Talin Koutnouyan, Business Economics Dr. Mark Maier, Professor of Economics Glendale Community College On Economic Development Abstract Introduction Methods Results Conclusion References Acknowledgements There are a variety of different factors which influence the economic growth rate of a country. One of the most overlooked factors is religion and its influence on the economic development of a country. Using the data that is readily made available through international surveys, two primary causes of economic growth rate are established. The first is church attendance, and the second is the religious beliefs of individuals within the country. After plotting the growth rates in correlation to the percentages of church attendance, and belief in heaven and hell, I concluded that based on Barro’s and McClearly’s thesis, it is not church attendance, rather the belief in hell, heaven, or both that causes the economic growth rate of a country. More importantly, a solution is provided on how an emphasis in morals and ethics in relation to work can be implemented to result in the overall growth of a country. Religion and Economic Growth across Countries, Robert J. Barro; Rachel M. McCleary American Sociological Review, Vol. 68, No. 5. (Oct., 2003), pp. 760-781. Mr. Smith and the Preachers: The Economics of Religion in the Wealth of Nations Gary M. Anderson, The Journal of Political Economy, Vol. 96, No.5. (Oct., 1988), pp. 1066-1088. Spirit of Capitalism. Religion and Economic Development., Harvard International review, Robert J Barro Religion and Economic Development : An idea whose time has gone, Stephen K Sanderson, Joleen Loucks, 2004 Economic Growth and Church Attendance (belief in hell included within the data) growth rate (unexplained part) monthly church attendance (transformed) .06 .04 .02 .00 -.02 -.04 -.06 -3 -2 -1 0 1 2 3 4 Economic Growth and Belief In Hell growth rate (unexplained part) Belief in Hell (transformed) .06 .04 .02 .00 -.02 -.04 -.06 -3 -2 -1 0 1 2 3 4 Economic Growth and Belief In Heaven growth rate (unexplained part) Belief in Heaven (transformed) .06 .04 .02 .00 -.02 -.04 -.06 -3 -2 -1 0 1 2 3 4 Economic Growth and Church Attendance (belief in heaven included within the data) growth rate (unexplained part) monthly church attendance (transformed) .06 .04 .02 .00 -.02 -.04 -.06 -3 -2 -1 0 1 2 3 4 • The data included in this research includes indicators of economic, political and social aspect for 59 countries observed since the year 1990. •The main sources for this data is the World Bank and data from Barro and McCleary’s research paper. •The data set was then enhanced by including measures of religiosity using the World Values Survey for the year 2002. •Then, the information which included church attendance and beliefs in correlation to GDP increase was plotted and the error percentage was calculated for each regression point. I would like to thank the following: Dr. Mark Maier my faculty mentor, for his encouragement, patience and expert advice; Dr. Michael Harnett, for supplying me with the valuable information necessary for the success of my project; members of the Glendale Community College Scholars Program, for their opinions and input; and finally, special thanks to my family and friends who supported me throughout my research. The research topic for this project primarily deals with the subject of religion and its link on the economic growth of a country. During the 20 th century, Max Weber a German Sociologist, first presented his theory on the possible link between religion and economics in his book: The Protestant Ethic and the Spirit of Capitalism. His main hypothesis demonstrated that capitalism was first initiated through the credos of a religious group, the Puritans. As a result, this caused Weber to conclude that for a country to be successful in capitalism, that success would be largely dependent on the belief system the society was structured on. In addition to Weber’s idea, there were economic studies done by Gary M. Anderson, an economist whom analyzed the effects of religious extremism, which he concluded to “have positive effects on economic growth.” However, I provide a counter- example using Gujarat, a Hindu state to prove the negative effects it can have on a nation’s economy in the long run. As Barro and McCleary demonstrated, a relationship does exist between religion and its effect on economic growth. In addition to their thesis, it should also be taken into consideration that it is not the number who attend church within a country that causes the economic growth and development, but the percentage of those who believe in heaven and hell. One main problem encountered throughout the research was the misleading data that showed high GDP numbers where crime rates and violence were high. As a result, I disagree with that aspect of the research presented by Anderson and would like to recommend to use data containing NDP which would provide a more accurate picture of the economy. Moreover, since factors of belief in heaven and hell lend to the growth of a country, I would like to conclude that it would be beneficial for a country to present information and educate the public with morals pertaining to hard-work to cause an economic prosperity among the society. Positive Correlation = Economic Growth Negative Correlation = Growth Rate Reduction • The data shows that increases for church attendance reduces economic growth. • Higher levels of church attendance depresses economic growth because greater attendance signifies a large use of resources by the religion sector. •The overall effect combines the resources used up by the religion sector, the social capital aspect of this sector, and the influence of organized religion on laws and regulations. • In contrast, for given levels of church attendance, increases in religious beliefs-notably belief in hell, heaven, and an afterlife tend to increase economic growth. • Through the demonstration of the figures above, it is shown that a belief in hell is more potent for the economic prosperity as opposed to a belief in heaven. •Beliefs stimulate growth because they help sustain specific individual behaviors that enhance productivity within the economy.
