Religious Norms, Human Capital, and Money Lending in Jewish European History

Circa 1000, the main occupations of the large Jewish community in Muslim Spain and of the small Jewish communities in southern Italy, France, and Germany were local trade and long-distance commerce, as well as handicrafts. A common view states that the usury ban on Christians segregated European Jews into money lending. A similar view contends that the Jews were forced to become money lenders because they were not permitted to own land, and therefore, they were banned from farming. This article offers an alternative argument which is consistent with the main features that mark the history of the Jews: the Jews in medieval Europe voluntarily selected themselves into money lending because they had the key assets for being successful players in credit markets. After providing an overview of Jewish history during 70–1492, it discusses religious norms and human capital in Jewish European history, Jews in the Talmud era, the massive transition of the Jews from farming to crafts and trade, the golden age of the Jewish diaspora (ca. 800–ca. 1250), and the legacy of Judaism.

Islam and Human Capital Formation

Given the rich scientific tradition of the Muslim world, current levels of scientific production in predominantly Muslim countries are surprisingly low. A recent survey of the state of scientific production in Muslim countries found that forty-six predominantly Muslim countries produced 1.17 percent of the world's science literature between 1997 and 2007. The historical record provides evidence that religious diversity and religious tolerance helped constrain Islam's conservative elements for hundreds of years. This article examines the extent to which the behavior of Muslim religious authorities helps explain the evolution of Muslim scientific development in the premodern era. It begins by providing a brief overview of scientific production throughout Islamic history and then examines the role of religion in both the flourishing and stagnation of Muslim science. The conclusion provides suggestions for future research and examines the extent to which the historical evolution of Islam provides lessons for encouraging scientific progress today.

Religion and the Spread of Human Capital and Political Institutions

Although often ignored, religion has profoundly shaped political and economic conditions around the world. This claim is suggested by three historical divergences: a divergence between Protestant, Catholic, Orthodox, and Muslim regions of Europe (these differences emerged after the Reformation and began to dissipate only after World War II); a divergence between Protestant and Catholic settler colonies in Oceania and the Americas; and a divergence between the impacts of Protestant and Catholic missionaries on societies throughout the global South prior to Vatican II (which ended in 1965). This article discusses religion and the spread of human capital and political institutions, focusing on Christian missions as a quasi-natural experiment. It argues that both in Europe and in the global South, Protestants shaped human capital development (mass education and mass printing) and institutional development (civil society, colonial rule of law, and market economics)—especially prior to the 1960s. Together, these shaped elites' incentives and thus long-term prospects for economic development and political democracy.

Immigrants, Migration, and Religious Economies

Over the twentieth century, Western democracies began to adopt more inclusive immigration laws, which enabled people from diverse nations to move to Europe and North America. Not surprisingly, many of these immigrants carried with them religious traditions not commonly found in their new homelands. Yet immigration also has a more elemental relationship with religion, because religion often contributes to political conflicts that lead to forced migration, and religious oppression frequently motivates religious minorities to seek more accepting cultural environments. Research in the economics of religion often draws on the impact of immigrants on religious markets and the impact of religious markets on immigrants' religious practices. This article reviews studies on the connections between religion and migration, and discusses how these are related to economic theories of religious and cultural behaviors and institutions. It presents findings from the United States detailing how migration impacts religious markets, how religious factors structure migration, and some economic consequences of religious commitments among immigrants.

Data and Directions for Research in the Economics of Religion

Over the past twenty years, there has been a surge in the use of economic theory to understand religion. The earliest work was developed both by economists and sociologists, and interest in applying economic theory to religion remains strong in several disciplines. A welcome by-product of this interdisciplinary interest has been the collection of data addressing questions posed by economic theory. This article reviews various sources of data, including surveys of religious congregations, religion censuses, and the growing number of cross-national collections. Much of the discussion focuses on the free and readily accessible data collections available from the online Association of Religion Data Archives. After reviewing the data sources, the article considers issues related to the use and refinement of the data, focusing in particular on measurement issues, such as the construction of indexes. Finally, it highlights a few online research tools that are readily available for researchers and discusses the potential for developing additional online options for data generation, data refinement, and theory testing.

Religion under Communism

During the twentieth century, various communist governments undertook concerted efforts to secularize their societies through means of force and persuasion. These governments can be understood as regimes that combined Marxist-Leninist one-party rule with state ownership of the means of production and central planning. They attempted to regulate religious markets by intervening in both the supply of and the demand for religion, pursing policies that can be characterized as combining the strategies of regulation and substitution. Religion was to be substituted with “scientific atheism,” a key feature of communist ideology. Atheist or intentionally secular ceremonies and rituals replaced religious ones both in public and in private life. By regulating the market, the communist regimes sought to control the supply of religion. Ultimately, however, the success of the communist project depended on eliminating people's demand for religion. This article examines religion under communism, focusing on state regulation, scientific atheism, and the dynamics of supply and demand.

Funding the Faiths

Of all the things that sustain formal religious institutions, none is more essential than material support. Without adequate income, congregations fold, denominations fail, and the faithful flock to greener pastures. Nor is any facet of religious commitment more concrete and quantifiable. Faced with skepticism about the accuracy and consistency of attendance and membership rates reported by individuals or institutions, the obvious alternative is to follow the money. Strange as it may seem, the economics of religion has yet to pay much attention to financial matters. The basic argument of this article, which suggests some first steps toward a general theory of religious finance, rests on a series of observations concerning the impact of government, production, religious beliefs, and religious competition. The article also applies the outlined principles across many different times, places, and traditions, including modern Europe, nineteenth-century Christian America, American Judaism, Buddhism, paganism, and Hinduism.

Toward Better Measures of Supply and Demand for Testing Theories of Religious Participation

The supply-side approach to understanding religious participation is perhaps one of the more influential ideas of the religious economies model. The term “supply side” was first applied by R. Stephen Warner to Roger Finke and Rodney Stark's analyses found in the Churching of America (1992). In that book, Finke and Stark suggest that most previous historical and sociological explanations of changing religious participation rates over time and across national and geographic settings had been based on notions of changing levels of demand for religion, theories which have since been labeled demand-side theories. This article describes some of the data limitations that make it difficult to distinguish the separate influences of supply and demand in real life analyses of religious participation rates. It then presents a method which, when applied to common geographically based data sets, can be used to construct measures of demand that are independent of measures of the supply of religion. The article summarizes the results of the 2000 Religious Congregations and Church Membership Study (RCMS) and presents U.S. county-level census data from 2000.

The Effects of the Protestant Reformation on Human Capital

Max Weber's (1904) thesis that the Protestant Reformation was instrumental in facilitating industrial capitalism in Western Europe is generally viewed as the “most famous link between culture and economic development.” Weber suggested that Protestants had a specific work ethic that made them work harder and save more. In recent work, an alternative explanation has been proposed that receives strong empirical support: Protestants had higher human capital, which made them more productive and therefore increased their economic prosperity. This article explores the recent advancements in the economics of religion that assign a leading role to human capital in understanding the economic effects of the Reformation. It first provides a brief sketch of the underlying theory and then presents extensive evidence on the effects of the Reformation on human capital using data from nineteenth-century Prussia. The article also discusses consequences beyond education, covering effects on economic development as well as on the fertility decline. Evidence from outside Prussia, both across and within countries, is also presented.

The Political Economy of the Medieval Church

The exact starting and ending dates of the Middle Ages may be difficult to specify, but historians are virtually unanimous that the period, however demarcated, represented the high tide of Christianity in Western Europe. Medieval Europe provides an interesting case study, not only of religion and politics, but of the overlap between them, which was far greater in medieval society than it is today. The medieval Roman Catholic Church, as an economic and political entity, attempted to accomplish its otherworldly goals in this world by acquiring power and influence. Most large corporations need access to capital markets to grow and prosper. The medieval Church was no exception, but it was constrained by its own admonitions against “laying up earthly treasure” and “serving Mammon instead of God.” This article discusses the political economy of the medieval Church, focusing on its response to the Crusades and also considering purgatory, indulgences, and the Protestant Reformation, as well as marriage as a sacrament.