Session 7D: ERel-Ed: Teaching Students the Economics of Religion [ASREC]
Meetings of the Association for the Study of Religion, Economics, and Culture, 2009
Enhancing Traditional Courses:
Integrating Topics in the Economics of Religion
Robert J. Stonebraker
Winthrop University
stonebrakerr@winthrop.edu
Abstract: Integrating topics from the economics of religion can enrich a wide variety of
undergraduate courses that use microeconomics. Students typically respond favorably and gain
an enhanced appreciation of the power of economic concepts. Although most of my
experimentation has been with an introductory economics course for non-majors, I have used
them successfully in teaching Principles of Microeconomics, Intermediate Microeconomics,
Public Finance, Game Theory and Managerial Economics as well.
As my fellow panelists have so ably demonstrated, it is possible to teach entire courses on
the economics of religion at different levels of sophistication for different audiences. I've
considered trying to present a similar course, but faculty shortages and conflicting curricular
demands have not allowed me to do so thus far. For those who might be interested, I've
appended a sample syllabus for the course I envision.
However, being unable to offer a full-fledged three-credit course does not mean I cannot
teach many of the same concepts. Concepts from the economics of religion can easily be
incorporated into many traditional economics courses.
Why does it matter?
Why should we care about such things? Why worry about integrating the economics of
religion into an undergraduate curriculum?
First, most of us obviously find the subject to be exciting, to be interesting, and to be
important. We think it matters, and we want others to think the same. But not everything that
matters can or should find its way into undergraduate classes. Some are too complex; others are
too specialized. As economists we certainly appreciate the reality of scarce resources,
opportunity costs, and trade-offs. Is the economics of religion a more valuable topic than its
alternatives? I believe it is.
My mantra is that economics is a social science that studies and predicts behavior in all
areas of life. I push the notion that if behavior differs across people or across time, it is because
the perceived costs and benefits of that behavior differ. Few of us awaken at 3:00 a.m. and, with
no cause, spontaneously proclaim ourselves reborn. We change when we perceive it to be in our
best interest to change. Not any sooner. Not any later.
Students expect costs and benefits to drive corporate behavior. They expect Microsoft to
weigh costs and benefits before setting software prices; they expect Disney to weigh costs and
benefits before launching a new theme park. However, if economic models can illuminate
corporate price and product decisions, why not other decisions as well? If expected costs and
benefits drive every choice, then economic models and analytical tools should yield insights into
every choice.
I am an enthusiastic advocate of the economic way of thinking. I applaud what some
have termed economic imperialism. I have spent much of my professional life trying to apply
economics and economic thinking in a variety of non-traditional areas and making that analysis
accessible to a wider audience.1 If we believe that economics is a way of thinking, we must teach
accordingly. And the most effective way to do this is to show that basic economic principles can
be applied in a wide variety of areas, not just "business" or "consumer" areas. That means we
must use examples and illustrations from unconventional areas; areas like religion.
Liberal arts students often bring unwelcome baggage into our economics classes. They
walk in with disinterest, even latent hostility. If we are to reach them, to turn them on to the
beauty and joy of economics, we must convince them that our field transcends blind profitmaximization. We need unconventional applications to show them how economics intersects
with all areas of life, not just business. Lectures to such students about the economic choices of
GM or Microsoft will elicit little more than sideways looks at nearest clock. But discussions
about how economics can explain the relative success of different religious traditions will pique
their curiosity and open up a new way of viewing the world around them.
Business majors also can benefit from such an approach. They need to have their
horizons expanded. Many of the employment/career opportunities will be in the non-profit
world; yet few economics or business classes address this increasingly large segment of the
economy. And religion certainly constitutes a major part of that sector.
More importantly, in our more honest moments, we know that a year after they leave our
classes few of our students will be able to accurately reproduce a graph showing a monopoly’s
profit-maximizing price and output or even calculate an arc price elasticity of demand. Indeed,
many cannot even remember them for the final exam. We think the intricacies of our graphs are
exquisite, but most of our students do not. We might be better served by spending our time
showing how economics relates to parts of their life that they do see as important, faith for
example. Not only might such ideas prove to be more memorable, they might also be enough to
tempt our students into wanting to pursue this thing called economics more seriously.
How can we do it?
I have used several different approaches to this. The easiest is to throw a few
supplementary readings into a course syllabus at the appropriate places. Many excellent articles
have appeared in multidisciplinary journals and are accessible to undergraduates with little or no
background in economics. The readings need not be discussed in class; they can be used as
independent learning opportunities for students outside of class. On occasion I have offered
students a choice of several articles and then asked them to write a short two-page review of the
article. In courses requiring longer research papers, issues in the economics of religion easily
could be included in a list of suggested topics for students to pursue. Such assignments involve
minimal class time, yet still give students insights into the field.
However, many of you will want to devote in-class lectures and/or discussions to
showing how economics theory can generate insights into religious behavior.
Where can we teach it?
Concepts from the economics of religion easily fit into a wide variety of courses. I
personally have used them in teaching Introduction to Economics (for non-majors), Principles of
Microeconomics, Intermediate Microeconomics, Public Finance, Managerial Economics, and
Game Theory. [We teach a wide variety of courses in small departments.]
Economics for non-majors
Most of my experimentation has been with an introductory economics course for nonmajors. Teaching a general education course for non-majors can be challenging. Sociology
majors and art majors and biology majors and even business management majors often show far
less enthusiasm for price elasticity formulas than we might like. But there are advantages as
well. Because these students will not be pursuing economics, I feel less need to present a specific
set of traditional material to them. I appreciate the insights one can gain from production
isoquants, but if I ignore them my students will not be disadvantaged in subsequent courses.
They typically will not be taking other courses that use them. No harm will be done.
It is liberating. It has allowed me more freedom in developing courses and to experiment
with unconventional material; especially the economics of religion. I currently assign and
discuss readings on three different topics.
Area #1:
Externalities/public good issues
When teaching externalities I typically used pledge drives on public television to
illustrate free-riding and discuss the problems in producing efficient amounts of non-excludable
and non-rivalrous goods. The example works but, in recent years, I have thrown religious
congregations into the discussion as well. I describe the congregations as providing a type of
public good. We discuss how congregations theoretically could exclude non-buyers from
products such as attendance at worship, but choose not to do so. Students understand that a
relatively small number of members often contributes most of the needed financial resources
while others free ride, and readily discuss how that might impact the ability of the congregation
to produce desired ministry programs. They also like discussing the relationships between freeriding and congregational size and see that if people opt to free-ride in a religious context, they
certainly will opt to free-ride elsewhere when the opportunity occurs.
When I first used such concepts, I was pleasantly surprised to find students jumping into
the discussion with similar examples drawn from their student organizations. They complained
that such groups, like congregations, were carried by a small number of participants while many
free-riding students happily claimed membership on their resumes, but faded into the shadows
when work needed to be done. This allowed me to discuss differences between club goods and
public goods, a distinction I typically would gloss over in such classes, and was a perfect lead-in
to Larry Iannaccone's work on sacrifice and stigma.2 Every year at least one bright student then
makes a link to fraternity hazing and sets off a spirited debate on the impact of such practices on
the campus community.
Area #2:
Competitive vs. monopolistic behavior
In this introductory class I skip the traditional graph-laden market theory found in
textbooks, but want students to think clearly about how competition impacts market efficiency.
After discussing externalities, students understand that market failures occur and want to know if
there are other circumstances in which competitive markets can lead to inefficient outcomes. It's
a perfect place to discuss "sacred canopy" issues. Does pluralism and competition in religious
markets destroy the "sacred canopy" of a monolithic faith and lead to secularism, or does it
invigorate religious resources and create increased religiosity? The notion that Episcopalians
and Baptists might compete in ways very similar to that of Domino's and Papa John's captures
the interest of many students. They often have interesting personal observations on the ways in
which competition plays out in the real world.
Area #3:
Market strategies
Traditional courses often discuss ways in which firms might increase customer demand
for their products and keep customers from straying to other firms. As Iannaccone has pointed
out, religious organizations have been unusually successful in demanding consumer exclusivity.3
How do they do it? How do the Baptists keep their members from dabbling in Catholicism and
Buddhism? Could secular firms employ similar strategies with as much success? Students enjoy
trying to unravel such puzzles and discussing how churches offer full-lines of cradle-to-grave
services, how they develop belief systems (technologies) that are incompatible with other
competitive systems, and how they develop strategies that reward allegiance and/or penalize
defection to rivals.
It works. It captures their attention and interest. I require students to write short papers
in which they must apply concepts from the course to events and issues in their personal lives. A
surprising number choose to discuss the economics of religion. Many students relate stories
about free rider problems in their own congregation. One even wrote about how her mother quit
her job as a lay assistant at a large congregation because of her frustration with free-riding
members. Another wrote about how the construction of a new congregation across the street
from his started a competitive battle between the two and another wrote of how her family had
been pushed out of a strict, fundamentalist congregation because they insisted on worshipping at
mainline churches on a semi-regular basis. At least in South Carolina, topics in the economics of
religion hit home.
Additional course applications
These same concepts and examples that I use with non-majors easily can be incorporated
into both principles of microeconomics and intermediate microeconomics courses. In fact, more
advanced courses allow more complex discussions.
The last time I taught intermediate micro I raised some eyebrows by asking whether or
not terrorist acts by religious extremists could be considered rational economic behavior. And,
when I had students read textbook material that used Hotelling models to describe how firms
locate in product space, I shifted to an application of the economics of religion in class. It was
an easy jump to use religion as example of a market with differentiated products and to discuss
how denominations might jockey for optimal locations in a theological product space. We know
that if cereal firms leave a product niche empty, new competitors are apt to invade at precisely
that point. Can we observe the same phenomena in religious competition? Will new religious
entrants look for empty or under-served market niches? And how might firms react to threats of
entry? Secular firms crowded by entrants on one side of their product spaces might shift their
product mix away from the competition toward the less crowded side of the space. Presidential
candidates crowded from the right side of the political spectrum, might shift their stance to the
left. Do religious firms react in similar ways? 4
Discussions of monopoly theory offer another tie-in. Here we can dip into the extensive
literature on religious pluralism and the debates on monopoly vs. competitive religious markets
and take off in almost any direction. Government entry barriers can create secular monopolies;
can they create religious monopolies as well? Why might governments create such entry
barriers? We know that secular monopolies raise price and restrict output. Would a religious
monopoly have a similar impact? What "price" does a religious organization charge?
Field courses offer still more opportunities. Religious examples of free-riding and club
goods fit nicely into Public Finance courses, as do discussions of the interactions between public
and private giving. When governments fund charitable activities, how are private, religious gifts
affected? Do government dollars crowd out private dollars? Or, do government funds bestow a
stamp of approval and crowd-in additional religious contributions? 5 Game theory courses
might discuss how religion and religious communities can impact trust and reputation and how
that might impact the outcomes of prisoners' dilemma and related types of games. Here in South
Carolina many small business claim to provide "Christian" service. The local yellow pages
advertise Christian plumbers, Christian roofers, Christian landscapers, and many others. Are
these signals credible? How might a service provider make them credible? Finally, at least one
text in the field now includes a discussion of Pascal’s Wager in what is called the Existence-ofGod-game. 6
My latest experiments have been in a Managerial Economics course I teach for Executive
MBA students. I started by using some of my own research in the section on regression analysis
and showed how publicly available data could be used to estimate cost and revenue equations for
church congregations. Perhaps because a significant minority of my students work in nonprofits, and because nearly all are actively involved in their churches (remember, I’m in South
Carolina), they seemed more interested in these statistical applications than in more traditional
ones discussed in textbooks. When I then assigned them a short regression project, one student
decided to check to see if there were statistical differences in the giving patterns of Presbyterian
churches of two different regions, one that included wealthier communities than the other.
Given the success of my first experiment, I next incorporated religious examples in the
forecasting section of the course. Instead of discussing how public utilities might forecast
kilowatt demand or how an auto dealership might forecast its inventory needs, I asked the class
how a congregation might forecast contributions for an upcoming budget year. It set off the best
discussion I ever had gotten of the subject. They immediately started to speculate on issues such
as what factors drive rates of giving and will economic downturns cause people to cut back on
giving as a result of lower disposable incomes, or will it cause them to give more to satisfy
increased perceived charitable needs.
Conclusions
Concepts from the economics of religion literature complement the material in a variety
of courses. When I first began using them I feared that they might be an unwelcome intrusion
that would offend my students’ religious sensibilities. I was wrong. Students enjoy these nontraditional applications. They enjoy seeing how economic principles can be just as effective in
shedding light on behavior in the sacred world as in the secular world. It grabs their attention
and encourages them to think of new things in new ways. It’s fun to see.
I encourage you to try it; you’ll like it.
Endnotes:
1.
My web-text, The Joy of Economics: Making Sense out of Life, can be accessed at
http://faculty.winthrop.edu/stonebrakerr/book.htm.
2.
Laurence R. Iannaccone, "Sacrifice and Stigma: Reducing Free-riding in Cults,
Communes, and Other Collectives," Journal of Political Economy, volume 100, number 2
(April 1992), pp. 271-291.
3.
Laurence R. Iannaccone, "Risk, Rationality, and Religious Portfolios," Economic Inquiry,
April 1995, volume 33, number 2, p. 285(11).
4.
For an interesting discussion of such applications, see Pedro Pita Barros, and Nuno
Garoupa, “An Economic Theory of Church Strictness,” The Economic Journal, vol. 112,
no. 3, July 2002, pp. 559-76.
5.
Several of Dan Hungerman’s papers address this issue. See, for example, “Are Church
and State Substitutes: Evidence from the 1996 Welfare Reform,” Journal of Public
Economics, October 2004.
6.
Harrington, Jr., Joseph E., Games, Strategies, and Decision Making, Worth Publishers,
New York, 2009, p. 70.
Note: This paper builds upon an earlier paper presented at the ASREC Meetings in October
2007.
Appendix:
Suggested Course Outline:
Economics of Religion
I.
Introduction: Definitions and Rationale
Descriptive data on religion and trends in religiosity
II.
Consumer Theory and Demand for Religion
A. Religion and rational choice
B. Factors affecting demand
1. Theoretical models
2. Empirical evidence
C. Religious capital and choices through time
III.
Supply
A. Theory of non-profit enterprises
B. Churches as firms
1. Revenues
a. Descriptive data
b. Club theory, externalities and free riding
c. Theories of religious giving
2. Costs
a. Input choices and production technologies
(1) Volunteerism: trends and issues
(2) Professional labor markets: trends and issues
b. Economies of scale and scope/optimal firm size
IV.
Religious Markets
A. Equilibrium quantities of religion
1. Current data
2. Competition between sacred and secular institutions
3. Historical trends
a. Demand-side explanations
b. Supply-side explanations: competition and regulation
B. Competitive market structures within religion
1. Descriptive data
2. Spatial models of competition and structure
C. Choices across religious traditions
1. Risk and diversification
2. Denominational switching theory
3. Changes in denominational market shares
a. Historical trends
b. Models of denominational growth
c. Church vs. sect
4. Competition and religious doctrine
D. Choices within religious traditions
1. Congregational growth theory and data
2. Mega-churches: past, present, and future
[My personal bias is to emphasize the role of economics in explaining religious choices and
markets. However, it would be easy to include material on the impact of religion on economic
choices and markets as well. The topics below could be covered and expanded.]
V.
Economic Impact of Religion
A. Religion and economic development
1. Christianity and western economic development
2. Islam and economic development in the Middle East
B. Religion and public choice
1. Models of religion and political preference
2. Public and religious charities: crowding out and crowding in
3. Markets for education
C. Religion and family economics
1. Religion and family structures
2. Religion and labor force participation decisions