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The economics of religion and terrorist organisations (Part 3)

Note: These are my notes, re-interpreted for this medium. Therefore, opinions that you think are ascribed to Professor Iannaccone should be checked against his published work. See Economics of Religion, Iannaccone papers at George Mason University, or use a browser search.

The second open seminar by Prof. Larry Iannaccone was specifically sponsored by the Canberra Branch of the Economics Society of Australia.

"Economics of Religious Extremism and Terrorism—links to radical religious organisations—link to terror—underlying causes of terrorism"

Iannaccone explained the ‘new paradigm’ of looking at religion through the lens of economics, showing that it was economically rational versus the ‘old’ thinking, explaining that self-sacrificing was common to both saints and suicide bombers.

    He discussed:
  • the father of modern economics, Adam Smith, in The wealth of Nations talked of self-interest, market forces, and regulation that can be applied to studying religion;
  • the work of Nobel prize winning economist Gary Becker regarding marriage, crime, cost/benefit;
  • the “terms of trade” (with God) by clergy and congregations, and how religion has changed over the years, as unpopular ‘products’ have gone out of style and churches/religions have introduced ‘new products’;
  • ’scarcity’ and how religions control access to the ‘product’;
  • ’supernaturalism’ and how it transcends limits through technology, the uncertainty, and the premise that says “IF God is there, then there is a tangible ‘good’”;
  • hence, investments in religion (prayer, financial commitment, sacrifice, etc) make sense;

Iannaccone discussed the rational individual’s decision making process concerning religion: That it is worth being involved (investing) in religion if the marginal cost is acceptable, because the pay-off (eternal life, etc) is potentially tremendous. He went on to discuss studies into atheists that showed around 15% of people declared themselves as such (noting ~25% in the former East Germany) and how this position does not bear up under rational economic scrutiny; the marginal cost can be so small for the potentially huge pay-off that atheists must be considered (economically) stupid.

In this light, the economic and social theory of “secularisation” (that society would become more secular) initially expressed by Marx and Freud has demonstrably failed. He said that it’s a good theory, but WRONG! in that people still express belief in the supernatural / God in substantially the same numbers as in former times; there is an unquenchable demand!

    He discussed how, in economic terms, religion has adopted market models (supply/demand):
  • the ‘market’ develops;
  • groups of religious professionals emerge;
  • ‘industrial’ terminology appears (group descriptions, marketing terminology adopted, etc);
  • natural competitiveness, with sects and groups and gatherings proliferating;
  • a uniquely wide range of ‘products’ and applications of them have emerged;
  • markets deal with information and uncertainty (credence goods), and the groups let out information in a manner that keeps people returning;
  • quality and guarantees are offered;
  • reputation is important;
  • institutional structure is useful (e.g. reduces fraud, increases information);
  • leaders (clergy) must be seen to be poor (ensured by seeking credibility);
  • collective production (giving by many to build the institutional edifice) leads to “free-riders”, leading to:

    • communes are undermined by success;
    • costly demands provide solutions;
      apparently ridiculous ‘consumption’ (or foregoing something) limits the free-riders, which screens out the half-hearted and increases the relative value of group activities;

  • ’cost’ leads to people being better-off

This explains why, in many religious groups, what society would consider to be ‘deviant’ (high cost) demands are normal, and non-obvious wants are thus met. (Example: Sikhs in America are very identifiably different, and gain by using their cultural teaching of honesty to be seen in society as trustworthy in business, leading to broad success as a group.)

Iannaccone said that sectarianism is the outcome of lower regulation by government. The ‘dark side’ was expressed by Adam Smith and David Hume in their discussions on ‘religious enthusiasm’. He said that government would tend to encourage indolence in clergy as this tones down enthusiasm for conversion, expressions of social conscience, and civil strife.

The USA is an example of profusion when government is hands-off to religion; over 3,000 groups identified in an ongoing study.

A significant lesson from the studies is that extremists are not violent when not repressed. (He stressed that studies show it is much more dangerous to be in a secular group / gang.)

Studies also show that Radical Islam is dysfunctional when there is a poor relationship with government, and that autocratic societies promote dysfunction.

Religious freedom encourages tolerance and limits danger / extremism.

In question time…

Studies into Catholicism show that only about 15% are ‘active’ (meaning attendance once per month, or more); recent changes are NOT secularisation of the Catholic church; historically, the statistics for people entering Catholic holy orders were rising up until Vatican II when the changes to observance and particularly dress for those in holy orders, etc, were changed with the effect of making the people involved feel less special by undermining the distinctiveness hence popularity of the ‘club’, and that this was a fundamental mis-understanding of the “Law of Unintended Consequences”.

Which religion is most prone to violence? Islam or Christianity. Answer… Communism (and the Soviet state turned their system into secular religion; however, ‘real’ religion was suppressed but not crushed as recent history shows.)

Church and State: Originally, the separation was to protect the state from the church but, now, it is taken to be the other way around; “Freedom of religion” does not mean freedome FROM religion; there are many ways in which interaction can (and should) occur; sudden change in the relationship is unlikely (as governments rarely do anything rashly or swiftly or at all once involved); the USA’s position is not coherent, especially as it applies to ‘religious’ education, and that ideally students should be neither advantaged or disadvantaged by studying at a school with religious ties.


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