Is Religious Adherence Bad for the Economy?

Last week on NPR, science correspondent Shankar Vedantam reported that Muslim-majority countries see slowed economic growth as citizens fast during Ramadan. In those years when Ramadan lands in the summer (longer days mean longer fasts), the effect is especially harsh as GDP falls by up to seven-tenths of a percent—no small amount.

But before he concludes that Ramadan is bad for the economy, Vedantam notes that Muslims (and religious people in general) consistently report to be happier than non-believers. Even if religious adherence suppresses economic growth, he says, economists ought to consider happiness levels before condemning religious adherence as an economic drag. Besides, what’s the point of economic progress if people aren’t any happier?

It’s refreshing to see public intellectuals entertain the notion that religious adherence has value. Too often, commentators (especially economists) are content to draw conclusions from raw numbers alone, which, as noted above, don’t speak well for religion’s economic value. But unfortunately, Vedantam’s analysis still misses the mark on the true effect of religious adherence on economic outcomes.

Boiled down, what Vedantam offers is a ‘material vs. non-material’ perspective on valuing religious adherence. He implies that observers should weigh religion’s net-negative economic effects against its net-positive psychological effects before pronouncing final judgment. It’s up to each individual to determine which effect wins out.

This analysis is shallow. Serious religious adherents know their faith’s effect on economic activity extends far beyond how behaviors like fasting diminish productivity or praying steal from time spent at work. Serious religious adherence changes the way one views the world. It affects everything from personal health to family life to work ethic—characteristics with great implications for economic performance.

Measuring religious adherence’s effect on the economy without accounting for these important, albeit more subtle, influences yields totally useless conclusions. We don’t measure the net economic effect of college education, for example, according to how classroom and study time stole from time that could have been spent working. CEOs don’t value an employee training course only by how much time it kept employees away from their desks. What matters is the whole story of not just how a particular behavior steals from productivity in real-time, but also how it changes things down the road—things not always easy to measure with numbers and graphs.

Ironically, Vedantum made this connection without knowing it. He credited religious people’s emphasis on family life, among other things, for their above-average happiness. But the happiness that a strong family brings is not due to the mere fact of a strong family. It’s due, at least in part, to the economic benefits strong families cultivate (and, of course, their staving off economic harms). Strong families reduce dependence on government welfare and social institutions for support. They cut the incidence of mental illness and addiction. They facilitate better academic performance among children—higher grades and more school attendance than levels seen among children from broken homes.

These are some of the reasons why strong families make people happier, and it shows why the psychological benefits of religious participation are due at least in part to the economic benefits religious adherence (in this case, as it relates to family life) brings about. In that light, religious adherence often passes not only Vedantum’s psychological test, but also his economic test—the aggregate of all economic benefits facilitated by religious participation surely surpasses the seven-tenths of a percent GDP loss precipitated by a nationwide fast.

Now if only commentators could recognize that religion has value in its own terms and not just as a contribution to economic or psychological outcomes.

Nick Freiling is studying for an MA in Economics at George Mason University.