One of the first questions asked, by Corry Azzi and Ronald G. Ehren-berg,32 and in somewhat different context later by Laurence R. Iannac-cone,33 concerned the determinants of religious participation. Azzi and Ehrenberg employed a multi-period model of household behavior and two data sets—one on statewide church membership and another based on a survey sample of church attendance—to test a number of relationships that concern sociologists: (1) male versus female participation in church-related activities; (2) the age distribution of church attendance; (3) relationship(s) between income and church attendance; and (4) demographic characteristics (black/white, urban/rural) of church attendance. Their model allows individuals to allocate their resources (time and goods) to both temporal and "afterlife" consumption. Afterlife consumption, heaven, eternal peace, communion with God, and so on, is a function of time engaged in religious activities during one's lifetime.34 Their results tend to corroborate the work of sociologists in the field. They were able to explain, for example, why religions that are less time intensive grow faster in the United States than more time-intensive religions, by connecting membership in the latter to households with lower alternative time costs (lower wages imply a lower cost of engaging in non-wage activity). Azzi and Ehrenberg also found that religious participation rates rise with wealth; that higher wages (of both genders) reduce church attendance rates; that rural religious participation rates exceed those in urban areas; that females have higher religious participation rates than males; and that male church attendance falls off significantly as men grow older (presumably due to health considerations). These results have been challenged by other investigators, either in whole (by D. H. Sullivan in 19 8 5 35), or in part (by Laurence R. Iannaccone in 199836), but the study by Azzi and Ehrenberg had an important catalytic effect on further research.
Iannaccone extended Azzi and Ehrenberg's model to include religious human capital in the form of knowledge, familiarity with ritual and dogma, and other factors, suggesting that the service sold was something more than the promises of an afterlife.37 Defining a specific stock or amount of religious experience that an individual has built up at any given time as a function of previous activities, Iannaccone acknowledged the possibility that religion can be a kind of addiction that can grow over time. In such circumstances, perhaps unsurprisingly, children tend to adopt the religion of their parents (e.g., "cradle Catholics''); religious switching takes place at relatively early ages and in belief systems similar to those in which early capital has been acquired (i.e., as religious capital is acquired with age, the cost of switching rises); and individuals tend to marry within their own religion, a result that was asserted by Becker at an earlier date.38
The operational premise established by these early investigations is that demand for religion is determined by the sacrifice of both time and goods. Becker confirmed that the value of time is a function of income, wealth, or wages, a result that is pivotal to understanding several key issues in the economics of religion, including such factors as individual choice of religions, interdenominational mobility, the nature of religious firms, and the nature of religious products or services.
One area of religious participation that has come under increasing scrutiny concerns the economics of cults. Not surprisingly, inspiration for this kind of analysis can also be drawn from Adam Smith, who believed that religious cults had the potential to create civil disorder and unrest. He clearly understood that membership in religious organizations had "club" effects—that is, that the utility a person receives from his consumption of a club good depends upon the number of other persons with whom he must share its benefits.39 He provided a brilliantly intuitive example of self-interested self-regulation. Smith asserted that a "man of low condition'' in a small community will regulate his behavior appropriately due to low information costs (i.e., everybody knows his business). By dint of moving to a city, the same person sinks into "obscurity and darkness'' and becomes vulnerable to profligacy and vice. Seeking redemption and respectability, such a person may join a "small religious sect.'' Smith described the consequences as follows:
He from that moment acquires a degree of consideration which he never had before. All his brother sectaries are, for the credit of the sect, interested to observe his conduct, and if he gives occasion to any scandal, if he deviates very much from those austere morals which they almost always require of one another, to punish him by what is always a very severe punishment, even where no civil effects attend it, expulsion or excommunication from the sect. In little religious sects, accordingly, the morals of the common people have been almost always remarkably regular and orderly; generally much more so than in the established church. The morals of those little sects, indeed, have frequently been rather disagreeably rigorous and unsocial.40
A key point of this passage is that in a religious sect the utility derived by any single member depends on, and affects, the utility of the other members. This proposition is also true of clubs.41 A corollary of this is that sects and clubs inevitably face a "free-rider" problem—the prospect that some members will receive the benefits of membership without bearing proportionate costs.
The benefits to church or cult membership are both private (confined to the member) and public. The public benefits that Smith recognized take the form of a well-ordered society, open to the progress that is promised by innovation and science. These benefits can be circumvented by superstitious and irrational governments, as Smith recognized, which explains why he put so much emphasis on the organizational structure of religions and their relationships to the state.
Iannaccone argues that strictness is the mechanism used by religious sects to control the free-rider problem. He attempts to explain an apparent anomaly, at least to economists, namely why some people prefer religions that demand greater sacrifice, that is, why individuals might choose strictness over leniency. Iannaccone contends that because the cost of monitoring group utility-reducing behavior is high, religious sects turn to strictness as a means of controlling the free-rider problem.
It may be possible to demand of members some salient, stigmatizing behavior that inhibits participation or reduces productivity in alternative contexts: shaved heads, pink robes, or an isolated location does the job quite effectively____Deviant norms thus mitigate the externality problems faced by religious groups. Distinctive diet, dress, grooming, and social customs constrain and often stigmatize members, making participation in alternative activities more costly. Potential members are forced to choose: participate fully or not at all. Paradoxically, those who remain find their welfare increased. It follows that perfectly rational people can be drawn to decidedly unconventional groups.42
This analysis rationalizes the use of certain screening mechanisms, such as one-time initiation costs and ongoing membership costs (e.g., "dietary restrictions, Sabbath laws, distinctive clothing, celibacy, geographic isolation, and the like''43). More recently, Eli Berman has extended this analysis to the behavior of terrorist extremists.44 Though useful in a limited way, this avenue of research offers little to explain the operation of pervasive religions.45 For example, Catholics within large community churches may easily escape scrutiny when they miss Sunday Mass. Likewise, financial contributions by members of large corporate churches are difficult to monitor. Free-rider problems in large churches remain intractable for the most part.
A major shortcoming of Iannaccone's work is its neglect of the nature of the product and the form of its demand. Sacrifice and stigma may explain how certain temporal benefits can accrue to a small group, but the fact remains that for many religious participants the demand for religion is primarily supernatural. Among Christian religions, the chief product is an afterlife. Theology as a blueprint for achieving a happy afterlife does matter. By rejecting Azzi and Ehrenberg's "afterlife consumption motive'' Iannaccone assumes a demand function, but does not specify its form. In other words, he takes demand for granted. Moreover, within the constraints of his model, if the demand function were to be specified, it would only apply primarily to a club good with individuals' benefits determined by the number of adherents. Yet, as we argued above, and attempt to demonstrate below, there are both private and public good aspects to religion. A full-scale theory of demand for religion must take into account both aspects of this complicated product.
Once the promise of an afterlife is admitted to the analysis, the religious product becomes a kind of credence good. Credence goods require that certain types of assurances be given in order to satisfy purchasers46 because the quality of the good in question cannot be determined either before or after the sale.47 Actually, given time and/or resources expended, one could determine the quality of such "credence goods'' as tax services, psychiatric counseling, transmission repair, home security systems, or marriage and family counseling—goods for which quality assurances or licensing are routinely given. The quality of transmission repair, for example, will be revealed over time as will that of tax services and marriage counseling. With regard to an afterlife (e.g., heaven, hell, nirvana), however, it is self-evident that the quality of the product is unknowable even with time and resources spent. Dead men tell no tales, even about what lies beyond this earthly vale of tears. Thus we go beyond the credence good characterization to characterize religion as a meta-credence good, because unlike some earthly credence goods (such as automotive repair or psychiatric counseling), verification cannot be achieved with time or resources spent. While, as we will see, some earthly warranties may be given by suppliers of religion—indeed, there may be huge investments in quality assurance claims—no church offers a money-back guarantee to a soul that is dissatisfied with his or her afterlife experience. This fact, however, does not seem to hinder an active market in religion that, in the United States alone, comes in thousands of different forms.
The credence-good nature of religion conforms to and may help explain some of the club aspects of religious practices, because the plausibility of a religion's claim to salvation is buttressed when others adhere to the same belief system. This interaction creates something like a superstar effect, as described by the late economist Sherwin Rosen,48 meaning that positive benefits flow to those outside the group as well as within. However, this facet alone does not explain the initial or ultimate demand for religion. The complete and accurate specification of the demand and supply functions for religion poses the most intractable problem in the economics of religion. The issue is further complicated by the fact that in markets for Christian religions, assurances of eternal salvation rarely if ever make up the sole object of demand. Religion is in almost every case a complicated product that serves many different wants of demanders, including social services, political cohesion, access to business contacts, reduced information costs (e.g., with respect to dating and marriage), and so on. As a result, churches, as suppliers, are necessarily and incessantly engaged in establishing observable quality dimensions for their product.49
The critical nature of the product and the essence of product demand and product supply are major concerns of our inquiry. We look at markets not merely in the static sense of equilibration at a fixed point in time but also in the dynamic sense of how behavior, institutions, and outcomes change over time. What we find in the existing literature is that some studies amplify the demand side of the market to the neglect of the supply side, while others stress the supply side at the expense of demand. Nowhere is the nature of demand and supply nailed down in any precise fashion. What is needed is a cohesive and workable foundation for this most basic of market phenomena. As the economics of religion expands to embrace the work of more and more specialists, awareness of this important lacuna is starting to emerge. Thus, aware that religious pluralism can accommodate heterogeneous consumer preferences because not all demanders will desire the same theology or strictness, Kent D. Miller, a management scientist, maintains that economic theory must transcend Iannaccone's principle of strictness in order to understand religious organization.50 Whereas Iannaccone recognizes resource commitments, he does not elaborate on the feasibility of extracting such commitments from diverse market participants. When the dynamic efficiency of markets is considered, product differentiation designed to satisfy heterogeneous demands must be a part of the organizational characteristics of religious markets. Thus, strictness is an outcome of religious adherence and organization, not a cause of it. According to Miller: "Differentiation can increase per capita organizational resources by exploiting switching costs across subcultures. Hence, a strategy of focused differentiation may result in more loyal participation, with loyalty expressed in terms of longevity of involvement as well as resource com-mitments.''51 In effect, Miller argues that a competitive process wherein degrees of strictness are perceived as outcomes creates efficient religious organizations.52
Whereas Iannaccone's strictness issue has been a lightening rod for several additional studies, other researchers have pursued different aspects of religious participation. For example, Brooks B. Hull and
Gerald F. Moran conducted empirical studies on religious participation in colonial churches of New England in general and Connecticut in particular.53 Jody Lipford, Robert E. McCormick, and Robert D. Tollison explored the relationship between religious participation and crime.54 Ian Smith,55 Ian Smith, John W. Sawkins, and Paul T. Seaman,56 and Ian Smith and John W. Sawkins57 verified Adam Smith's proposition that connects market structure and church attendance, using national and international data. Jonathan Gruber modeled the impact of market density on religious participation and economic outcomes, concluding that higher religious densities lead to higher participation and to better outcomes involving income, education, and marital status.58 As interesting and productive as these studies may be, the shadowy nature of the demand for religion haunts them all.
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