Larry Iannaccone on Sacrifice, Stigma, and the Economics of Religion
Date: September 21st, 2014

Why do ultra-orthodox Jews wear such strange garb?  Why do two-year mission trips and prohibitions on alcohol enhance the organizational strength of the Latter Day Saints?  We answer these questions and many more with Prof. Larry Iannaccone, an economist at Chapman University and the founder of the Association for the Study of Religion, Economics, and Culture.

Our interview begins with a gushing review of Larry’s work by Tony, who considers Prof. Iannaccone as an instrumental influence in his own work.  We talk about whether (and how) economics can be used to understand religious behavior.  Larry recounts the difficulty he had in getting other academics to take the economics of religion seriously, how he built this perspective up into a community that includes hundreds of scholars, and then Tony reminisces about his first encounter with this eclectic economist.

We then turn to the main question at hand, which is to examine why some of the most demanding religious faiths tend to have the most committed members and also tend to grow faster than religions that “cost less.”  This puzzle has been one that has vexed the minds of sociologists of religion for decades, including the great Dean Kelley in his book Why Conservative Religions are Growing.  We contextualize this puzzle in terms of a simple economic framework.  One would naturally expect that if an organization imposes high costs on its members, fewer people would be interested in joining (as per ye olde economic textbook rule — the more you charge for something the less you get of it).  Tony also notes that in his classes he asks students to design what they would consider to be a successful religion and the majority of responses tend to be “laid back, low cost” type faiths.  But then Larry runs through a list of the more strict denominations — e.g., Jehovah’s Witnesses, Mormons, ultra-orthodox Jews — and we see that these are some of the most vibrant religious communities out there.  He also reviews some of the evidence for the strength of these “high cost” religions, including regular attendance, financial contributions (as percentage of member income), extracurricular participation in church groups, and intensity of friendship networks.

The next segment of the interview focuses on why requiring seemingly irrational sacrifices and stigmatizing behavior helps build group strength.  This is set into the context of collective action theory, a major topic of research in the social sciences.   There are two principal reasons why high-cost religions are successful.  First, high-cost sacrifices screen out free-riders — i.e., people who want the benefit of the group without having to contribute much to the provision of it.  Larry notes that religious congregations have certain features that categorize them as “club goods,” wherein the quality of the good or service provided is dependent upon how many individuals contribute whole-heartedly to the provision of the good.  We talk about churches where all members sing with passion tend to be more enjoyable than churches where people merely mumble their way through the hymns.  A high-cost sacrifice, or a stigmatizing behavior that might ostracize an individual in the broader culture, gets the “mumblers” (free-riders) to reconsider whether they want to join or not.  Those who do join have self-selected into a pool of individuals who will be fervent in their participation.

The second reason for the success of strict religions is that the members who do enter (or remain in) the congregation do participate fervently to the congregation and the overall benefits obtained are much higher than the costs of the sacrifice or stigma.  In other words, people who do pay the high costs of strict sects find out that they got a good bargain.  Larry and Tony provide their own illustrations of how this works.

We finish the interview with a brief discussion of how this theory can apply to other groups ranging from prison gangs to environmental groups.  Larry also details an experiment he conducted with Jason Aimone, Michael Makowsky, and Jared Rubin that provided further evidence in support of this theory.  While his previous work on this topic back in the 1990s was based upon a number of empirical sources, including survey research, this new experiment (based upon the voluntary contribution method game) shows how the theory still stands under a completely different lens of scrutiny.  Tony notes how this research represents a major contribution to political economy and should net Larry a Nobel Prize.  (Yeah, he is that excited about it.)  Larry then ends with a short discussion of where the boundaries of the economics of religion need to be pushed.  Recorded: September 8, 2014.

RELATED LINKS

Larry Iannaccone’s bio at Chapman University’s Institute for the Study of Religion, Economics, and Society.

Association for the Study of Religion, Economics, and Culture.

Note: Prof. Iannaccone’s publications are generally in academic journals that are behind paywalls, but can be accessed with educational accounts. The following are a list of the ones we talked about and readers are encouraged to visit them at their leisure:

“Endogenous Group Formation via Unproductive Costs,” Review of Economic Studies (2013) 80, 1215-36.  With Aimone, Makowsky, and Rubin.  (This is the article with the experimental game.)

“Sacrifice and Stigma: Reducing Free-Riding in Cults, Communes, and Other Collectives, “Journal of Political Economy (1992) 100, 271-91.

“Why Strict Churches Are Strong,” American Journal of Sociology (1994) 99, 1180-1211.

“The Market for Martyrs,” Interdisciplinary Journal of Research on Religion. (2006) 2.  (Online journal free with registration.)

“Religious Extremism: The Good, the Bad, the Deadly” Public Choice (2006) 128, 109-29.  With Berman.

RELATED PODCASTS

Larry Witham on the Economics of Religion.

Eli Berman on Religious Terrorism.

Sean Everton on Dark Networks.

Michael McBride on Religious Free-Riding and the Mormon Church.

Michael McBride on the Economics of Religious Leadership.

Colleen Haight on the Oracle of Delphi.

Jared Rubin on Christian and Islamic Economic History.

Timur Kuran on Islamic Economics.

Donald Kraybill on the Amish and Old Order Mennonites.

Robert Nelson on Environmentalism as Religion.

Russ Roberts & Anthony Gill on Religion and Religious Liberty.


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