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What Is Religion, and How Do Economists Think about It? – an Excerpt

Religion has not been a popular target for economic analysis. Yet the tools of economics can offer deep insights into how religious groups compete, deliver social services, and reach out to potential converts-how, in daily life, religions nurture and deploy market power.
Here is an excerpt from Sriya Iyer’s book, The Economics of Religion in India.

It is 6 a.m. in the South Indian temple town of Swamimalai. The temple is buzzing with activity: priests in traditional dress chant holy scriptures in harmony; sticks of sandalwood incense and oil lamps are lit till they glow brightly; vendors hawk their wares loudly, selling fruits, flowers, and garlands to adorn the temple idols. The idols themselves are bathed in milk and honey and dressed for the day in beautiful rainbow- colored silks, bedecked with jewels. The smell of sweet rice and jaggery cooking together for the morning prasadam (an offering to the gods) fills the air. And yet for all its beauty and grandeur, the exotic sights and smells of a South Indian temple at dawn is just another early morning ritual for the residents of this little town on the banks of the Kaveri River— a heady cocktail of prayer, jasmine, roses, sandalwood, jaggery, oil, and ghee that is believed to preserve and protect them forever.
The aim of this book is to discuss why economists need to be concerned about bringing their insights and methods to bear on the study of religion, and how this might be helpful for development policy— not just in India, with which this book is primarily concerned, but also in other countries characterized by religious pluralism. In The Religion We Need, the distinguished Indian philosopher of religion Sarvepalli Radhakrishnan wrote that religion “is an expression of the spiritual experience of a race, a record of its social evolution, an integral element of the society in which it is
found” (1928, 25). Almost forty years after Radhakrishnan wrote his book, two sociologists of religion, Charles Glock and Rodney Stark, defined religion in Religion and Society in Tension as “what societies hold to be sacred, comprises an institutionalized system of symbols, beliefs, values, and practices focused on questions of ultimate meaning” (1965, 4). Scholars have grappled for centuries with the question of how to define religion. For economists, definitions are central to the process of modeling. Yet the vast scholarship on defining religion suggests that it is not possible to define it precisely. Of course, there are very famous textbook definitions that social
scientists agree are helpful in this respect. Émile Durkheim’s definition of religion is usually considered one the most famous: “A religion is a unified system of beliefs and practices relative to sacred things, that is to say, things set apart and forbidden— beliefs and practices which unite into one single moral community called a Church, all those who adhere to them” (1915, 4).
Economists use economic theories to understand religion and draw upon both theoretical and empirical economics to help elucidate religious practice and religious change. This chapter draws upon literatures in sociology, philosophy, and history to discuss these issues and illustrate how economists can make useful contributions to existing thinking on religion and its role in society. For example, I explore issues such as the secularization hypothesis; the relationship between religious pluralism and religious participation; why some religions appear to become more flexible or accommodating as they evolve over time, while others develop more fundamentalist groups of adherents; and the resilience of religion (Stark and Finke 2002). I also discuss the manner in which religion contributes significantly to the building of norms and networks among populations. I contrast these economic theories, which claim to account for the resilience of religion, with theories from other disciplines such as those involving family socialization, social networks, and a belief in otherworldly or supernatural elements. The key aim of the book is to view the persistence of religion in societies not merely as the outcome of largely sociological processes, but also as a rational economic response to changes in the political, ecological, and economic environments in which religions operate. The competitive, adaptive, pluralistic, and fragmented character of Hinduism makes the economic approach both particularly helpful and indeed necessary for understanding religion in India. Moreover, while much academic research has been devoted and is being devoted to the study of Christianity and Islam, relatively little work, at least in economics, is devoted to the study of Hinduism. This book attempts to fill that gap in the literature.

The Economics of Religion in India has much to teach us about India and other pluralistic societies the world over, and about the power of economics to illuminate some of societies’ deepest beliefs and dynamics.

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