What Matters: June 2006
Is Religion Good for You?
By Jonathan Gruber '87
Photo: ©istockphoto.com/Juan Jose Gutierrez Barrow.
Religion plays an important role in the lives of many Americans. Over two-thirds of Americans belong to a church or other religious organization, and this has risen substantially over time. Two-fifths of Americans attend church in a typical week, and 95 percent profess belief in the existence of God or a universal spirit. Giving to religious causes accounts for more than two-thirds of all reported individual charitable contributions. Religiosity is not confined to particular income groups, racial groups, or locations in the U.S.; religious adherence and participation is widespread among all demographic groups.
Despite this important role, the field of economics has not paid much attention to religion as a topic of study. To help fill this void, I have completed a number of recent studies which demonstrate two interesting conclusions: religion plays an important role in determining individual well-being, and religiosity responds in important ways to public sector interventions.
Religion boosts wealth, personal relationships
A wide variety of studies outside of economics have claimed better outcomes for more religious individuals, but these studies suffer from the typical problem that we can't distinguish causation from correlation: does religiosity actually breed success or do more successful individuals simply choose to be religious? I have devised a method for distinguishing the causal effect of religion, which is to compare like individuals who live near or far from those of other ethnic groups that share their religion—since being near those who share your religion is a strong predictor of religious attendance. That is, Italians (who are mostly Catholic) who live near Poles (also mostly Catholic) are much more likely to go to church than Italians who live near Swedes (mostly Protestant). Yet there should be no other reason why living near Poles or Swedes should matter for the outcomes of Italians. Yet, it turns out that individuals who live near such religiously complementary ethnic groups not only attend religious services more frequently—they also have much better economic outcomes.
Taken together, the results imply that doubling one's frequency of religious attendance leads (on average) to 9 percent higher family incomes, one-half year more of education (mostly driven by a 9 percent rise in college graduation rates), higher odds of being married, and lower odds of being divorced. Thus, more religiosity does seem to translate to better outcomes.
Give more, attend less
The second aspect of my research in this area is an examination of how government interventions affect religiosity. The single largest public sector incentive for religiosity is the deductibility of charitable giving on the income tax. The U.S. government forgoes over $30 billion per year in income tax revenue by allowing individuals to deduct charitable giving from their income taxes, and, as noted above, most charitable giving in the U.S. goes to religious institutions. But this policy may have an unintended consequence: if individuals give more to church, they may feel less beholden to attend. In fact, I find that giving to church and going to church are highly substitutable: when individuals give more to religious charities because of the tax break to doing so, they attend less. Thus, subsidizing one type of religiosity reduces another.
A related question is whether church charitable activities are reduced as the government provides the same type of social services as churches. Indeed, before the New Deal of the 1930s, church spending on social services exceeded by a large amount the spending of the government on these same activities. But in a joint paper with Daniel Hungerman of Notre Dame, we document that there was a one-third decline in church charitable spending at the time of the New Deal which can be fully attributed to this government intervention. So government provision of these services did crowd out private provision, although the degree was quite small: each dollar in New Deal spending resulted in only three cents less of church spending.
Finally, another important public sector intervention targeted towards religion is the so-called blue laws, regulations that limit the ability of stores to open on Sunday in order to respect church going. In another study with Daniel Hungerman, we find that these laws were in fact serving their intended purpose: as the blue laws were waived across the U.S. states over the past 40 years, there was an associated significant reduction in church going. Given the initial findings discussed in this essay, that could be a negative ramification of waiving the blue laws. Indeed, in this study we find that as states waived their blue laws, not only did church going fall, but drinking and illegal drug abuse rose, particularly among those who previously were frequent church attenders.
Read Jonathan Gruber's complete study online.
About the Author
Jonathan Gruber '87 is a professor of economics at MIT, where he has taught since 1992. He is also the director of the Program on Children at the National Bureau of Economic Research, where he is a research associate, co-editor of the Journal of Public Economics, and associate editor of the Journal of Health Economics. Gruber received an SB in economics from MIT and a PhD in economics from Harvard. He was one of 15 scientists nationwide to receive the Presidential Faculty Fellow Award from the National Science Foundation in 1995. During the 1997-1998 academic year, he served as deputy assistant secretary for economic policy at the Treasury Department. Gruber was elected to the Institute of Medicine in 2005, and in 2006, he received the American Society of Health Economists Inaugural Medal for the best health economist in the nation aged 40 and under. His research focuses on public finance and health economics.
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