The Economic Modeling of Religion
Wednesday, November 1, 2006 
I usually view economic modeling as a more asymmetric activity than, modeling in physics. In physics, models are used to both understand why something happened or happens, and predict what will happen in future circumstances - the twin pieces of understanding and prediction. This is probably a biased view on my part, or a woeful lack of knowledge of the predictive power of economic modeling, but it seems to me that most economic models I read about are more useful in explaining the past. Any extrapolation of the model into the future basically depends on assuming similar conditions. Physics models are often tested by finding out what they predict for future situations under different conditions. (I am not including econometric modeling here, which I consider to be a qualitatively different activity - it is modeling that is more empirical in the sense that data crunching is used to establish the coefficients of the model equations.)
Again, my opinion may be totally nearsighted. If it is, let me know.
I write this because of a recent book titled The Marketplace of Christianity by R. Ekelund, Jr., R. Hebert, and R. Tollision, which was described in a recent issue of the Chronicle of Higher Ed. (Nov. 3, 2006, page A13) In the book the authors use economic analysis to describe such things as the number of different Christian churches through the centuries and the different acceptance rates of the Protestant Reformation.
Some of the models, at least as reported by the Chronicle, seem very far-fetched - a huge, Procrustean stretch, if you will.
The Reformation is the biggest example. For example, the authors view the Reformation as a reaction to the monopoly of the Catholic Church. On a basic level, the metaphor of Church as monopoly does seem on the mark. It's when the authors bring in subsequent price/market explanations that the model appears a bit outlandish.
Thus the concept of purgatory is claimed to be invented so that the Church could charge folks exorbitant sums of cash to move the souls of their loved ones on to heaven. (I note that purgatory is now closed for business, Pope Ratzinger having banished limbo earlier this year.)
There's more: Luther single-handedly helped create a "competitive market in Christianity ", with the Catholic church increasing their holy days to keep peasants from drifting to Protestantism. Meanwhile, Protestantism was burgeoning because it had a simpler, less expensive "pricing scheme."
Ok, maybe this is more fun than I thought. Certainly the Catholic Church had no competitors when it came to greed and avarice, as is graphically portrayed in Barbara Tuchman's A Distant Mirror and March of Folly. There were times when the church and its leaders - especially the popes of the middle ages - behaved as a sort of theological Enron , selling indulgence futures.
The problem I have with all this is that I can't think of a topic, institution, or social movement where economic modeling can't be used to explain it. It's only when predictions are made and tested that the qualitative difference between physics modeling and church-as-economic-agent modeling is brought out in stark relief.
And the predictions of the church using the economic model are not earth-shattering.
For example, the author's prediction that religion will always be around because of "existential angst concerning human existence" is a weak and obvious one. The other main prediction is that Westerners will continue to demand forms of religion that are "cheaper" in terms of time, money - a statement that is almost tautological.
I am always leery when models are used for social institutions because of this inability to produce models that correctly predict future situations. The church analyzed economically is one of the most feeble at this - the predictions can be made without the economic trappings, so why force -fit the economic analysis?
In other words, don't show me the money - show me the understanding and prediction. With that I'd accept any model.
Reader Comments (7)
Thanks for the comments on our book. You are absolutely right -- any model must have predictive power. But economics is not like physics in the ability to predict. There is no way (other than new forms of experimental economics) to directly test theories. Thus, our test of a demand/supply model for religion must be tested indirectly. That we do. In Chapter 3 a theory of demand (and supply) for religion is devleoped and in most of the rest of the book it is "tested." The demand for an alternative form of Christianity (from the Medieval RCC) was a function of relative prices. (Our earlier work Sacred Trust -- Oxford, 1996 details the elements of the price change). Changes in the demand for forms of religion after Luther was a function of demand shifters -- such as income, education, state of science, political stability, etc. (discussed in Chapter 3). Thus, in Chapter 9, new scientific knowledge in reproductive biology, genetic dispositions regarding sexuality, in addition to income differences (within and without the US) are used to broadly explain shifts and movements in the forms of Christianity. Is is in this (admittedly limited) sense that our model of religion is predictive. You mention the recent elimination of limbo (purgatory was invented by the RCC too). Consider Benedict's new "permission" to perform the Tridentine version of the mass. Where will the Latin rite be found? Mainly in the "south" -- i.e., in third-world countries that have low time costs and high demands for ritual. This would be a prediction of our model. Let's see what happens.
In any event, we do appreciate your comments. In the immortal words of Mae West, it is so much better to be "looked over" than "overlooked!"
Good luck in your studies at LaSalle.
Bob Ekelund
Eminent Scholar Emeritus
Auburn University
The extra details you have provided definitely have me intrigued, and I'll make sure our library has your book(s) so that I can use them as a resource in future versions of my Chaos and Fractals course. We spend a lot of time in seminar on the art, science, efficacy and ideology of modeling in general, so I really appreciate your point on needing to test economic predictions indirectly.
But a question on your prediction for acceptance of the Tridentine mass: doesn't a "high demand for ritual" necessarily imply "low time costs"? If so, is your model really predicting? Going further, if there are "low time costs" in certain third-world areas, doesn't that imply that many more instances of social/cultural constructs other than religion will also spread there?
What fun to disucss this! Yes you are correct. A highly ritualized religion implies low income. But I'd argue that the causation goes the other way. A low-income society (e.g., in Latin America) implies low time costs which has implications for many features of these societies -- elaborate cuisines, time consuming festivals, etc. We would argue that highly ritualized Christianity is one of the implications (results) of a low time cost.
Consider the evangelical movements in Latin America. These, like very traditional Catholicism, are quite ritualistic (some require special dress -- heads covered, etc.). (Leave alone the fact that Christianity of all kinds is mixed with pre-Columbian traditions). Our theory would predict that in low-income (low education) areas of LA we would find a predominance ofthese kinds of religion and in higher income areas, other less time-intensive forms of Christian religion (Episcopalians, etc.).In other words, low income (highly correlated with low levels of education) means that highly ritualistic forms of Christianity are "cheap." Ritual substitutes for monetary donations. The opposite would be expected in wealthier areas of third-world nations and, of course, in the "advanced" world. Political instability would reinforce this result, especially in Africa.
Now consider the reintroduction of the Tridentine rite and other changes advocated by Benedict. As a cradle Catholic (K through MA in Catholic schools), I remember the elaborate rituals of the mass and of Catholicism in general. (I call myself a "skeptic" now which means that I'm skeptical about everything, including skepticism). The Latin rite tends to be lengthy and elaborate and carries a good deal of "mystery," just the ticket for the third world. It has occured to me also that the possible "crack" in the birth control rule -- designed to prevent HIV between married Catholics but which will certainly open new doors in the general rule -- is a perfect competitive device to stem inroads of non-Catholic evangelical religions in the third world. It would lower the price of remaining (or becoming) Roman Catholic, a terrific competitive tactic.
We of course try to make no normative statements about religion. Existantial angst is not a result of our model but an assumption. In some sense, I do not believe that atheists exist -- whether religion is "hardwired" in our brains, an evolutionary adaptation or some inherent psychological necessity or simply the product of "faith." That is why we argue that religion is damn near ubiquitous if individual spirtuality counts as "religion." People will pick and choose so that there are as many forms of Methodism (Catholicism) as there are Methodists (Catholics). Charges of "secularism" as competing with religion in this sense is a myth. Science will change the FORM of belief, rules and ritual, but not the demand for something we might call religion in the broadest sense.
These are all weighty issues of course. Some economic model which carries predictions is only one small part of the human practice of religion or spiritual practices. The study of sociology, anthropology, religion, psychology, physiology, art, music, dance, etc. all must be considered. I am fascinated that you deal with art, for example, in your class. (I am currently the Acting Director of the University museum, with "acting" the operative adjective.) How do you use art in your class?
In all cases I thank you for your interest in this fascinating and sometimes infuriating topic. We work on and plan a third installment in time and I would welcome any and all comments you might have.
Best, Bob
PS If you are interested in religion in the third-world, don't miss the wonderful book by Anthony Gill, Rendering Unto Ceasar (Chicago).
I too was a cradle Catholic, but only K through 12. (My skepticism was more acute, perhaps.) I can follow your arguments for the birth control ruling as being good business strategy, but wonder about the ritualistic mass example. Like many of my generation who wistfully claim that the switch to the vernacular mass is one of the reasons why we left Catholicism, I often long for the chance to get a good dose of Latin, even with a typical Northeastern US "high-time-cost" life. So I wonder whether the economic model/explanation for the 3rdWorld affection for the Tridentine rite is as much "low time cost" as it is the mysticism of the mass that links us back through time to the beginnings of the RCC.
What is your opinion of the latest Daniel Dennett book on religion? I haven't read it, but have read much of his other works.
I cover art in several different ways, depending on the course/audience. In teaching a Quantitative Literacy course, e.g. I often cover the golden ratio and symmetry (especially when I teach the class at Temple U's Art Campus - I've done this several times, and it is always a great experience). In my Chaos and Fractals course, which is the impetus for this blog , the students and I often get into somewhat fierce debates about whether fractals, and computer-generated images in general, can be considered art. This has been great fun recently because of the controversy surrounding recent discoveries of Jackson Pollock's early works, and the use of fractal mathematics to determine authenticity. (Check the Index for all of the art-math posts.)
In the Chaos and Fractals course, which is an Honors seminar, the thread linking all of the topics is the use of models to understand and predict. This is why I reacted to your work the way I did, and why I put my reaction on this blog, which will be used the next set of Chaos and Fractals students.
How did you come to be acting director of the Museum?
Thanks for your posts!
Rich
I have two comments on the exchange between you and Bob Ekelund. First, the trouble with modeling religion in the standard economic manner is that in this "market," far than most others, the participants would feel their demand and supply decisions constrained by their sense of what is true. The historian William Leach coined the term "broker personality" to describe sellers whose goal was strictly to maximize profits and who did not hesitate to alter their good or service as service demand dictated. In my economic history course I was less harsh on the “broker types” than was Leach, pointing out that a certain modesty is partly at work when sellers back away from judging their product and treat the opinion of potential buyers as the sole criterion of worth. I also pointed out that we’d be in big, big trouble if religious leaders and professors (just to take two notable cases) simply gave us “what we want.” Commitment to truth makes this incompatible with “customer sensitivity,” at least when it comes to the main services offered by religion and by and universities.
Second, I must disagree with both of you that, to quote Bob Ekelund, "any model must have predictive power." As you, Rich, appear to point out in an earlier entry, "understanding" is also of great importance. Work that I have done tends to focus on exactly such understand without claiming to be able to predict. The late Milton Friedman brought economics to its present sorry methodological state by asserting in an early 1950s article that "assumptions don't matter." I have seen first-hand the mischief that this can cause. Beginning, I believe, with Thaler and Sheffrin around 1980, attempts to explain internal conflict have begun with the assumption of "two-selves" (or "multiple-selves") residing within each individual. If pressed, advocates of these models will probably stress that person isn’t really “two-selves” but simply behaves "as if" he is. As I have argued extensively, this does little to further our understanding of internal conflict. To tell someone trying to understand her internal conflict that she has more than one self begs the question, to put it mildly. To explain that the preference that moves them to act is not the preference that they prefer having, in contrast, "sheds light." To be in the grip of crummy preferences is to rationally act and to still be respected as a "whole." In addition, it permits normative evaluation of market shortcomings (markets are ill equipped to create preferences that we prefer having) while at the same time not particularly suited for making predictions. The two-selves models, in contrast, do not have the same normative weight. My point: assumptions matter if we are to gain "understanding."
David
Thanks for the detailed comments. I believe that your first point describing how the different nature of the "market" affects the economic analysis of religion is directed to Bob Ekelund, so I hope that he might check in and respond to your argument.
Your second point about understanding vs. prediction is provocative but your claim that "assumptions matter" doesn't seem to support your disagreement with the position that "any model must have predictive power."
Because understanding vs. prediction is one the major themes of my Chaos and Fractals course (and is the subject of numerous blog posts), I will continue this response as a new top-level post.
Rich
I've enjoyed your exchange and offer this brief response. I'll have to think about some of the points you raise.
David correctly aruges that I (and my co-authors) do in fact depict a market for religion in the Beckerian manner. It is a non-material good just as marriage,divorce,dating,artistic experience, etc. These and many more non-material goods have been analyzed for the past three or four decades in the literature. We simply take a demand for granted, observable in almost every known society, primitive and modern. (Many others have said as much). Our hook in Marketplace is that forms of religion -- product differentiation if you will -- is a function of particular variables such as income, education, state of science and many others. As these change, the form of religion demand changes and evolves. Supplier-entrepreneurs are in fact there to "discover" these often subtle differences and exploit them. We believe that the history of Christianity and religion generally supplies evidence to this effect. "Supernatural services" of all types -- fortunetellers, psychics (see appendix to Ch.4 for an empirical test of the latter), New Age, etc. ad infinitum -- are there and have alwyas been there to readily fill demands. Sadly, this is true of many professors as well. Grades and course content is, at many schools, determined by threats of dismissal or (for those with tenure) other kinds of unsavory treatment. One might interpret this as a "race to the bottom" but I think something different is going on in the religion market. If we take the entire span of human existence, religious "individuality" is double peaked -- one for primitive pre-agricultural hunters and one emerging in modern non-establishment clause nations. Note that the two fastest growing categories in the on-going U. Chicago social science study are "no religion" and "Christian, no denomination." The big problem is to define "religion" -- is it a church, an organization, individual spiritual belief?
As to "commitment to truth," I ask "whose truth"? The example of the on-going Episcopal-Anglican tussle over "truth" is a case in point (one which I give a lot of attention to in Marketplace, Chapter 9). The Old Testament appears to condemn homosexual behavior, butin that very place there is a litany of condemnations that, by modern standards, appear preposterous (slavery, eating pork, etc. etc. etc.). Who is to interpret what "truth" is in this and many other areas. Clearly, in the case mentioned, schism is underway by mutual interactions of suppliers and demanders. The majority of US Episcopal bishops hold a different truth than African Anglicans. (I am as deeply suspicious of those who claim to hold political truths as well).
I'll have to think about the "multiple selves" argument. I fear that this describes many people I know!
Regards, Bob Ekelund
PS A recent review of Marketplace in the London Times by an athiest friend of Richard Dawkins is very interesting. He likes the economic approach but has pithy things to say about the benefits of religion.