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The Invisible Hand Plays Dice: Eventualities in Religious Markets

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  • Panu Poutvaara
  • Andreas Wagener

Abstract

Religious participation is much more widespread in the United States than in Europe, while Europeans tend to view sects more suspiciously than Americans. We propose an explanation for these patterns without assuming differences in preferences or market fundamentals. Religious markets may have multiple equilibria, suggesting that observed differences in religious structures may merely be eventualities. Further, equilibria with more sects result in higher welfare and lower membership costs, as secular societies tend to host on average more demanding sects. Our main methodological contribution to the theory of religious markets is endogenizing simultaneously supply and demand of spiritual services.

Suggested Citation

  • Panu Poutvaara & Andreas Wagener, 2004. "The Invisible Hand Plays Dice: Eventualities in Religious Markets," CESifo Working Paper Series 1238, CESifo.
    • Handle: RePEc:ces:ceswps:_1238
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    References listed on IDEAS

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    1. Mark Chaves & David E. Cann, 1992. "Regulation, Pluralism, and Religious Market Structure," Rationality and Society, , vol. 4(3), pages 272-290, July.
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    6. Colin Rose, 1993. "Equilibrium and Adverse Selection," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 559-569, Winter.
    7. Eli Berman, 2000. "Sect, Subsidy, and Sacrifice: An Economist's View of Ultra-Orthodox Jews," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 905-953.
    8. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    9. Eli Berman, 2003. "Hamas, Taliban and the Jewish Underground: An Economist's View of Radical Religious Militias," NBER Working Papers 10004, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Helton Saulo & Jeremias Leao, 2011. "Equilibrium, Adverse Selection, and Statistical Distributions," Economics Bulletin, AccessEcon, vol. 31(3), pages 2066-2074.

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    More about this item

    Keywords

    sects; religion; tithes; religious markets;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L89 - Industrial Organization - - Industry Studies: Services - - - Other
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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