[Paleopsych] NYT: Thou Shalt Not Increase G.D.P.

[Premise Checker]

Thou Shalt Not Increase G.D.P.
NYT October 3, 2004
By DANIEL GROSS

CAN belief in heaven or hell be a competitive advantage for
nations?

It's not the sort of question that many economists ask.
After all, with exceptions like Adam Smith, the giants of
economic theory have had little to say on matters of faith.
And economists have tended to accept the secularization
thesis advanced by Max Weber in "The Protestant Ethic and
the Spirit of Capitalism," the Western Civ staple: as
economies become more advanced and as technology
progresses, religion will decline as a force.

What's more, many economists - with their penchant for data
and bedrock faith in the rationality of humans - may be
temperamentally unsuited to take religion seriously. Some
people, though, have tried to study both economics and
religion.

"Religious activity is very hard to quantify," said Eli
Berman, an economist at the University of California at San
Diego who has used economic principles to study radical
religious militias. "And religious groups tend to do a
whole bunch of things that look pretty darn irrational, at
least at first glance."

But the wall separating church and economics is being
breached. "In the past 5 to 20 years, more and more
scholars have been using conventional economic methods to
understand the way in which religion relates to the rest of
society, and to the economy in particular," said Laurence
R. Iannaccone, the Koch professor of economics at George
Mason University in Fairfax, Va.

The scholars now include Robert J. Barro and Rachel M.
McCleary, a husband-and-wife team based at Harvard.
Professor Barro is a prolific economist who has long been
interested in studying how and why economic growth rates
differ among countries. Professor McCleary, who directs the
Project on Religion, Political Economy, and Society at
Harvard's Weatherhead Center for International Affairs,
gained an appreciation of the importance of religion in
economic life while studying in Guatemala.

In a paper published last year in the American Sociological
Review, the couple set out to investigate the correlation
between variables like church attendance and belief in
heaven and hell and comparative economic growth rates from
1965 to 1995. "We thought there might be a positive
relationship between certain religious beliefs and economic
performance," Professor Barro said.

Investigating such a hypothesis can be difficult, in part
because different religious systems have starkly different
practices when it comes to their mode of participation and
belief in the afterlife.

But over all, the study confirmed the assumption that
greater economic development is associated with less
religiosity. In their results, which Dr. McCleary notes are
preliminary and need further investigation, the two also
reached some counterintuitive conclusions. First, in two
countries where religious service attendance is essentially
the same, the one whose people have a greater belief in
heaven and hell would experience faster economic growth.
Second, in two countries where the populations have similar
rates of belief in heaven and hell, the one in which church
attendance is greater would have slower growth.

Why? This "quantitative approach to the study of religion,"
as Professor McCleary calls it, rests on the assumption
that religion can affect economics by fostering beliefs
that influence productivity-enhancing traits like thrift,
hard work and honesty. A widespread feeling that such
behavior may ultimately be rewarded (a belief in heaven),
or that a lack of such behavior may be punished (a belief
in hell) may therefore spur economic growth. And if more
people and resources are devoted to holding religious
services without producing the desired output (a higher
level of belief), that would tend to lessen productivity in
an economy.

In other words, countries' economies may perform best when
people have relatively higher levels of religious belief
than religious participation. Among the nations falling
into this category are Japan, South Korea, Singapore and
some Scandinavian countries - all of which performed well
economically in the period studied. Countries in which
belief was low compared with religious participation
included India and many in Latin America.

Another finding was that belief in hell proved to be a more
significant economic factor than belief in heaven. "The
stick of punishment may be more powerful compared with the
carrot," Professor Barro said.

While noting that "we need a lot more and better data
before we can be confident about the results" of such
studies, Professor Iannaccone says economists should pay
more attention to the intersection of religion and
economics. "It's almost impossible to live in the 21st
century and look around and say that religion has no impact
anymore," he said.

INDEED, while Adam Smith's "Inquiry Into the Nature and
Causes of the Wealth of Nations" has been the bible for
generations of economists, signs indicate that some older
sacred texts matter to them as well. In December 2002, when
Vernon L. Smith, a pioneer in experimental economics,
accepted the Nobel in economic science, he paid tribute to
many intellectual influences beyond his mentors and
colleagues. He cited Benjamin Franklin, the Enlightenment
philosopher David Hume and several of the Ten Commandments.
The strictures against stealing or coveting a neighbor's
possessions, he noted, "provide the property-right
foundations for markets." And the prohibition against
murder, adultery and bearing false witness "provide the
foundations for cohesive social exchange."

Daniel Gross writes the "Moneybox" column for Slate.com.

http://www.nytimes.com/2004/10/03/business/yourmoney/03view.html