Religion and income inequality
- Published: 14 January 2014
- Written by Nicholas C. DiDonato
- Hits: 6210
Recent research has shown a correlation at the national level between high levels of religiosity and income inequality. That is, countries with high religiosity also have high income inequality. While theories vary as to why this is the case, Turkish economists believe they have a fairly definitive answer. Ceyhun Elgin (Bogazici University, Turkey) and colleagues explain this correlation by arguing that religious people make less demand for government services because they prefer voluntary and direct charity.
Obviously, correlation does not imply causation, and so the question is open whether high religiosity causes high income equality (perhaps because religion helps people cope with poverty, so they don’t seek more income) or whether high income equality causes high religiosity (perhaps because in an unfair society people turn to religion for comfort). It's this question that Elgin and colleagues hope to have answered.
They have derived their answer by focusing on religion’s function as establishing rules for proper behavior. Many religions prescribe charity as a means to alleviate the suffering of the poor, but do so in a private and voluntary way. Not surprisingly then, religious individuals (when compared to secular individuals) prefer lower taxation rates so that they have more money to donate.
Consequently, so Elgin and colleagues argue, the opposition to large government spending by religious people explains the correlation between religiosity and income inequality. And since whatever religious people donate to the poor does not count as "income" for the poor, their opposition to mandatory government redistribution appears statistically in an entirely one-sided way. When considering only income, religion’s effect of increasing wealth equality utterly vanishes. Tellingly, even though religiosity correlates negatively with income inequality, it has no clear relation with consumption inequality. In other words, even though a great disparity of income exists between the rich and poor in religious countries, the same cannot be said for the amount the rich and poor consume.
Elgin and colleagues turned their theory into fact by running a series of statistical tests from the data provided by the World Values survey covering a variety of countries. Here they relied on “belief in afterlife” as their measure of religiosity (because it best fit their theory of religion) and the Gini index as their measure of inequality. They indeed found that religiosity correlates (1) positively with income inequality, (2) negatively with national welfare spending, and (3) negatively with total government spending.
As such, the researchers conclude that, “In order to be able to spend a higher portion of their incomes on voluntary donations, the religious vote for lower levels of taxes as compared to secular individuals. The political process thus results in a smaller government size in countries with higher levels of religiosity, implying lower levels of spending on public goods and redistribution. Since tax-based redistribution is a major force shaping the distribution of income, our model implies greater income inequality in more religious countries.”
Religion correlates with income inequality, not because religious people hate the poor, but because they see the duty to help the poor as a private and voluntary duty - not something that should be entrusted to a large secular power. While not everyone will agree with this attitude, there may be something to be said for personally getting involved with helping others, rather than delegating that job to bureaucracy.
For more, see "Religion, income inequality, and the size of the government" in the journal Economic Modelling. For an editorial take on the question, interested readers may also want to check out "Why Conservatives Hate Obamacare" at our companion blog at Patheos.com.