The basic model

In the basic version of the religious choice model, which underlies all following models, a utility-maximizing individual derives utility from two types of goods: secular consumption and religiosity ,

. (2.1)

Benefits from religiosity can be manifold. Azzi and Ehrenberg (1975: 32) distinguish three different types: “afterlife consumption”, “current satisfaction” and social recognition.

“Afterlife consumption” (Azzi and Ehrenberg, 1975: 32) is the sum of utility a person receives in life after death and is a credence good as pointed out by Hull and Bold (1989:11) and Gill and Lundsgaarde (2004: 405).

In contrast, “current satisfaction” (Azzi and Ehrenberg, 1975: 32) or “temporal bliss” (Hull and Bold, 1989: 8) comprises “solace in this life” (Ekelund, Hébert and Tollison, 1992: 10),

“entertainment” (Hull and Bold, 1989: 8), private religious festivities like marriages and baptisms, but also personal social capital, that means networks from which the individual receives utility, be it in the form of “fellowship” (Hull and Bold, 1989: 8), personal support, societal status¹⁴ (see Sherkat and Wilson, 1995: 995, 999), access to the marriage market (Cameron, 1999: 441) or access to parts of the labor market. The greater the share of the regional population that attends (the same) church, the higher the utility from being a church member (Smith and Sawkins, 2003: 1581; Brañas-Garza, García-Muñoz and Neuman, 2007:

7). Participation in religious groups can therefore be seen as complementary to other activities like child-raising, leisure consumption or reputation-building (Ulbrich and Wallace, 1989: 8).

However, there is a negative side to this, too. When a large share of a person’s reference group attends church, religious participation becomes a social norm that individuals need to conform to in order to gain “acceptance, recognition and affirmation from their peers” (Smith and Sawkins, 2003: 1581). Gruber (2005: 11) finds that a high market density of a religion in a region increases church attendance for the adherents of this religion. There is a “social pressure motive” (Azzi and Ehrenberg, 1975: 32) related to religious attendance meaning that abstaining from participation could impose cost on the individual (see also Brañas-Garza, García-Muñoz and Neuman, 2007: 9). This pressure need not only come from a person’s

14 The social capital motive is also discussed by Brewer, Jozefowicz and Stonebraker (2006: 390). They state that some individuals are more interested in connecting with important people than in the religious teachings when they attend church.

peers, it can also come from the church itself when it instills a bad conscience in a person that does not follow church rules. This mechanism functions like a tax on all kinds of non-conformist behavior (Smith, 2002: 109).

From a theoretical point of view, the main difference between these three types of benefits from religious activity is that afterlife consumption takes place in a future period (after the person’s death) while the other two types of benefits accrue in the same period when they are produced. I discuss the implications of this difference below. However, in the basic one-period model this particularity is of no relevance and for the moment I leave open the nature of the benefits derived from religiosity .

The individual disposes of an exogenous endowment of time, , and monetary resources, . Both religiosity and secular consumption require the input of time ( and , respectively) and money ( and ).

(2.2)

(2.3)

Consequently, the individual faces the following time and budget constraints:

(2.4)

(2.5)

The Lagrangian function to be maximized is

(2.6) Solving the maximization problem and rearranging yields:

(2.7)

which is equivalent to

(2.8)

where is the marginal rate of substitution between the two commodities consumption and religiosity and is the marginal rate of transformation of the input in brackets.¹⁵ The results imply that both the marginal contribution of secular consumption and religiosity to the utility of the individual and the marginal productivity of the two inputs (money and time) determine the level of religiosity chosen and its mode of production. If the form of the utility function is such that religiosity creates large benefits in an (infinite) afterlife, individuals have a high marginal utility of religiosity. The same is true for individuals who live in an area where religious communities are important institutions in the everyday life, e.g. as a meeting place and organizer of leisure activities. This is more likely to be the case in rural areas (Mangeloja, 2003: 6). It might also be the case in regions where state social security systems are absent and support in the case of need is provided by religious communities (to their members).

The choice over inputs into religion depends on how religiosity can be produced (see also footnote 19). If the marginal productivity of contributing money to religion is high (a good example is selling of indulgences by the Catholic Church in the Middle Ages), individuals will mainly choose monetary inputs. In contrast, if religious persons are supposed to spend a lot of time reading the bible, attending services or praying, they will exhibit a high level of . Since religions and denominations differ in their teachings about how religiosity should be produced, e.g. through intensive study of holy scriptures or through being generous, the denomination has an important effect on the marginal productivity of time and money and therefore on the combination of inputs chosen.

Furthermore, it can be expected that exogenous increases in the marginal productivity of inputs in secular consumption will lead to reductions in time and money spent for religion.¹⁶ Gruber and Hungerman (2008) provide an impressive example. They investigate the effects of the repeal of so-called “blue laws” (i.e. laws that prohibit special activities, such as retail activities, on Sundays) on religious participation and religious contributions. When a state allows the Sunday opening of shops, individuals have greater secular opportunities to spend their time and money on Sundays – in other words, the marginal productivity of inputs into

15 A somewhat different illustration of the model results can be found in Clain and Zech (1999: 930).

16 For such an outcome it is necessary that the substitution effect exceeds the income effect.

secular consumption increases. As expected, Gruber and Hungerman (2008) find that religious attendance and religious giving drop significantly after the repeal of “blue laws”.¹⁷ 2.2.2 Endogeneity of income

The first extension of the model concerns the exogeneity of income. Such a modification has been suggested by Neuman (1986). Instead of assuming that the individual has an exogenously given monetary income , I now assume that the individual has some exogenous income and at the same time faces an exogenously given hourly wage rate . The income of the individual depends on the number of hours worked, , which in turn reduce the time available for secular consumption and/or religious activities. The time and budget constraints can be written

(2.9)

, (2.10)

while the utility function of the individual is the same as in Section 2.2.1.

The Lagrangian function to be maximized is

(2.11) Maximization of the problem yields

(2.12)

(2.13)

Rearranging (2.12) and (2.13) yields exactly the same results as above in (2.7) and (2.8): The marginal rate of substitution between the two commodities equals the marginal rate of transformation, i.e. the ratio of the productivities of an input (time or money) in the production of the commodities.

17 Adam Smith was probably the first to write about the substitutability of religious and secular consumption. In the “Wealth of Nations” he argues that the impact of overly strict religious sects could be limited if the government reduced restrictions in the market for entertainment. Lower prices for “jugglers, clowns, and actors”

(Anderson, 1988: 1073) would – in the terms of my model – exogenously increase the marginal productivity of

The budget constraint also determines the combination of inputs into a specific commodity:

(2.14)

which is equivalent to

(2.15)

For both religiosity and secular consumption, the marginal rate of technical substitution must equal the wage rate. In other words, the inputs must be chosen such that an increase by one unit of time spent with secular consumption (religiosity) reduces the monetary inputs necessary to maintain the same level of secular consumption (religiosity) by units. An exogenous increase in the wage rate will lead to a substitution of time spent with secular consumption (religiosity) with money spent for secular consumption (religiosity), given that both types of inputs have a positive marginal productivity with respect to secular activities (religiosity) (Neuman, 1986: 1195-1196). The condition that the wage rate determines the ratio of time and money spent on religion is not only valid within individuals, but also between individuals. Persons with a comparatively high income are expected to engage in religions or denominations that do not require large time inputs but highly appreciate financial contributions by their members (Azzi and Ehrenberg, 1975: 51-52).