Chapter 21. Religion, Culture, and Development

This chapter tries to synthesize the progress that economists have made towards understanding various aspects of the role of religion in human societies from a development economics perspective. We start by reviewing the contributions that consider religious beliefs as exogenously given and try to understand their effects on individual economic behavior, both directly and through the effect of religion on institutions. Next, we summarize the literature that considers adherence to and interpretation of religious dogmas by individuals as a strategic choice (i.e. using religious beliefs as instruments/means towards individuals’ (economic) ends). We proceed to review contributions that endogenize the content and the quantity of religious denominations, using the industrial organization approach. The final part considers the role of the state, which intentionally chooses to influence the contents of religion and the intensity of its dogmas. More precisely, we consider situations in which rulers may adopt a particular religion for the purpose of nation-building and external positioning or may instrumentalize the religion with a view to weakening internal political opposition and consolidating an authoritarian regime. We suggest that, in order to fully comprehend the role of religion, a political economy approach is required and it is necessary to consider the possibility that religion can be manipulated by political authorities for various reasons that depend upon the historical context.