Some years ago I came up with the idea of writing a frivolous book applying economic theory to analyse religions. Of course, work commitments intruded but I thought I’d share some of the ideas.
Are there increasing returns to religious affiliation?
To the extent that an individual will place a higher value on a larger network than a smaller one, then yes. And a larger network would enjoy a higher valuation because it will be better placed to provide the sorts of collective goods that religions provide pretty well.
If larger is better than smaller, then why do some religions have elaborate joining mechanisms?
If the aim of joining a religion is to enjoy collective goods, then we know that these goods are particularly prone to free-riding by others. Free-riding can be minimised by extracting substantial cost from members. Thus, the customs, costumes, rituals and other paraphernalia serve to screen members from non-members.
Growth of religions
Religions, like clubs, have a variety of strategies for maintaining their growth. Some, like Judaism, rely purely on organic growth. High entry barriers also makes it difficult for outsiders to join, and for insiders to extend the natural growth rate through conversion of non-Jew partners.
Islam is slightly more open. Alliances with Christians and Jews are allowed, but only for men – because it is believed that the children of a marriage will grow into the religion of the ruler of the house. High switching costs also maintain the growth rate of Islam
Christianity is a more open network, but is slowing in growth in comparison to Islam. Why?
The growth rate of a religion will be composed of a natural rate, linked to the birth rate, and a conversion rate. The birth rate in predominantly Christian countries has slowed because they have become more prosperous. Given that conversions are more likely to come from people of some faith, rather than no existing faith, then the switching costs of other religions will constrain the conversion rate of Christianity. My view? Judaism is like Apple – high cost, high affiliation value; Islam is like Microsoft – low cost, but the source code is unalterable. Christianity is more like Linux – open source, flexible and responsive.
Religious start-ups
What factors might affect the creation of new religions? Undoubtedly monopoly power will be a big factor. In the UK, there is effectively a state religion which limits the ability of alternative Christian creeds to get a foothold. This contrasts very well with the situation in the US where there is greater competition, and hence a greater variety of denominations that serve different preferences. Both of course are ostensibly religious countries, hence France, which has no state religion and also where religious affiliation is not valued greatly in political life, has fewer denominations.
Thanks to Russ Roberts for the pointer and getting me back onto this subject after a while.
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