Razib Khan One-stop-shopping for all of my content

February 3, 2011

Marketplace of the Gods: How Economics Explains Religion

Link to review: The dismal gods

June 24, 2010

The dismal gods

Filed under: Anthroplogy,Economics,Economics of Religion,Religion — Razib Khan @ 11:51 pm

marketplaceLarry Witham’s Marketplace of the Gods: How Economics Explains Religion is a manifestly ill-timed book. He states that “…around 2006 I began to notice a good deal of hoopla in the book market about economic explanations for just about everything-books that were best sellers.” Marketplace of the Gods was obviously written to capitalize on the prestige of economic explanations, but unfortunately it has come out after the bubble had burst on that market, so to speak. Within the past few years even many economists have come to admit that the power of their discipline’s logic can explain far less than they’d once thought. In fact, it seems a bit much for economics to explain everything when the core competency in financial domains are themselves being challenged. Even in 2008 in The Logic of Life Tim Harford was engaging in a rearguard attempt to prevent behavioral economists such as Dan Ariely from knocking the legs out from under the central thesis of his book. A more accurate subtitle for Marketplace of the Gods would have been “economic explanations of religion.” Not punchy or imperialistic, but true to the content of the text.

These explanations are rooted in a few assumptions derived from conventional economic methodology and applied to religion. Humans are rational, they settle upon strategies which can fulfill their preferences, and their world is characterized by scarcity and opportunity costs. Phenomena are best explained in a reductionist framework which takes a methodologically individualist stance. In other words, what’s in it for the individual, not society. Larry Witham documents the intellectual journeys of two giants in the field, Rodney Stark and Laurence Iannaccone. I have read Iannaccone’s papers, as well as most of Stark’s academically oriented books. There’s a lot of clear and crisp thinking there. Marketplace of the Gods reviews the long history of woolly theorizing about religion which explained everything and so nothing, and served as the ideal seedbed for the invasion of the subject by those wielding sharper tools.

But the supply side model of individuals consuming goods and services from competing religious firms, to translate religious phenomena into economic language, can not explain everything. The author acknowledges this in the text, but falls into traps whereby the theory which he has encountered allows for superficial inferences which are plainly false if one was aware of a richer set of data. Consider this passage:

In traditions that invest more intensely in human religious capital the rentention rate is highest. For example, Hindu, Catholic, and Jewish groups lose the least number of adherents over their lifetimes. In America today, 90 percent of Hindus were reared in that tradition, and the same goes for 89 percent of today’s Catholics and 85 percent of today’s Jews….

This sounds plausible enough, but the explanation that Hindus and Catholics have high retention because they “invest more intensely in human religious capital” is probably wrong. Hindus and Catholics have huge immigrant communities, and come from societies where religious switching is rare or taboo. The majority of American Hindus are immigrants, so they are not integrated into the American marketplace of gods. The Religious Landscape Survey which Witham references makes it obvious that American Hindus are not even particularly religious. Witham assumes they invest more intensely in human religious capital probably because of the 90 percent figure, but theory is misleading him because of the incompleteness of his data base. Similarly, Catholics have been the biggest contributors in the past decade to the irreligious segment of Americans. The last finding is relatively recent, and so may not have been available when Marketplace of the Gods was being written, but it shows the lack of robusticity of the set of inferences which one can generate from these models. New data easily overturns novel inferences on a regular basis.

Obviously there’s some real insight that can come out of the intersection of economics and religion. And Marketplace of the Gods serves as a decent precis of the literature, and its bibliography is well worth perusing. But if you know anything about religion it will be rather clear that the current theoretical contributions of economics in explaining most of the variation in the phenomenon is limited. Religion is a big topic, and a true “explanation” necessarily has to encompass evolution, psychology, history, and, economics.

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