Mike McBride on the Economics of Religious Leadership
Date: July 28th, 2013

Why is religious leadership important?  What function does religious leadership play?  And what is with all those public rituals?  We explore these questions with Prof. Mike McBride — associate professor of economics at UC-Irvine — who recently turned his scholarly attention to understanding the economic logic of authority and leadership.  Be forewarned, though, this is not your typical “Ten Habits of Effective Leadership” type discussion.  Instead, Prof. McBride trains the analytical tools of game theory and microeconomics to show how leadership is essential in coordinating social behavior.

We begin our discussion with a brief summary of what “economics” really is.  While most folks think it is all about “money” or “international trade,” Mike points out that economics is really the study of choice under scarcity or, alternatively, the study of how humans make trade-offs.  Given that we all face scarcity — be it in resources or time — the application of economics to the study of religion is perfectly natural.  Clergy members, as well as the laity, have to make decisions about how to use their time to further a variety of goals.  With that said, Mike points out that few (if any) economists of religion have paid attention to the important role leadership plays in guiding the resource decisions of an organization.

Our discussion of leadership begins with a basic definition of authority, which is the socially-recognized right to direct/coordinate action.  Leadership is the personification of that authority.  We then examine a critical function of leadership, which is to coordinate the actions and expectations of followers (congregants) so as to achieve some goal.  We discuss the economic concept of a “coordination game” and Mike presents it in a manner that everybody (or at least Tony) can understand, which is to compare the functions of a religious leader to a coach on a football team.  Without an agreed-upon focal point for decision-making — i.e., a leader, coach, pastor — chaos would reign regarding what actions should be undertaken.  We also discuss another type of game — the prisoners’ dilemma — wherein individuals know what needs to be done but have an individual incentive not to participate.  We all know that the sanctuary needs to be cleaned after services, but if everybody leaves that chore to somebody else, then the sanctuary never gets cleaned.  Once again, leaders are central in crafting shared expectations about who needs to do what in order to get that room cleaned!

Prof. McBride then touches upon three different mechanisms by which leaders help coordinate group activity — promoting other-regarding behavior; screeing out free-riders; and creating shared expectations via repeated behavioral patterns.  The first function includes selecting and propagating a set of norms and values that allow individuals to know what behavior is expeted of them relative to the group.  The second function, one that has been studied extenstively by economists of religion, revolves around the selection of certain “sacrifices” or “stigmas” that weed out “free-riders” from the group.  We talk about how proscriptions on certain behaviors (drinking) or prescriptions for wearing certain clothes (e.g., Amish dress) reduces the likelihood of individuals joining the religious group merely for the benefits of membership while avoiding any cost (e.g., tithing, volunteering).  Finally, we look at the importance of repeated interactions with other people, a process that helps turn a “prisoners’ dilemma” game into an easier-solved coordination game.  Here leaders are important fulcrums for facilitating these interactions.

Prof. McBride’s analysis leads to three interesting implications that are discussed in relation to various religious denominations including Catholics, the Amish and Latter Day Saints (Mormons).  First, we discover the underlying importance of ritualistic behavior, particularly when it comes to selecting leadership.  Rituals represent more than just rote memorization or action, but rather provide a public venue for individuals to reassure one another that they know who is in charge.  Second, Mike divorces the notion that leadership is always linked to hierarchy.  While titular heads of hierarchical organization (e.g., the pope) are important, authoritative leadership frequently emerges among the grassroots of an organization.  Mike offers up the Mormon church as an example of an entity that does have a hierarchical structure of leadership at the top of the organization, but that also provides numerous ways for leadership to emerge at the local (congregational) level.  Finally, we talk about how the deterioration of national religious leadership may be promoting secularization in society.  While previous economists of religion have argued that religious competition begets a vibrant spiritual life within a society, Mike also argues that it leads to pluralism which may have the effect of eroding the coordinating power of religious leadership.  We close with some of Mike’s thoughts on how his findings help us understand the issue of leadership writ large.  Recorded: July 22, 2013.



 Prof. McBride’s website at UC-Irvine.

The Religious Marketplace, a blog by Mike McBride.

Rational Ritual: Culture, Coordination, and Common Knowledge, by Michael Chwe (as mentioned in the podcast.)


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

Larry Witham on the Economics of Religion.

Eli Berman on Religious Terrorism.

Larry Osborne on Church Finances & Growth.

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