Bringing Religion into Economic Policy Analysis

After a long period of economic neglect of religion, recent articles in leading economics journals have been finding that religion has long played a surprisingly large role in influencing levels of economic development. Moving forward in the tradition of Max Weber, these articles find that Protestantism can have a positive impact in several key respects – inculcating cultural habits of thought and behavior generally favorable to economic development, encouraging specific economically beneficial activities such as a high level of literacy in society, and promoting a higher quality of democratic governance. If further careful analysis continues to shown that religion can be a key factor in explaining economic outcomes, this raises a novel issue for economic policy analysis. Might an economist as economic policy advisor make a religious recommendation to a society seeking a higher level of development? This paper seeks to open the discussion by economists of this difficult issue. The author draws in part on his own past experiences as a government economist working in areas where "environmental religion" seemed to be having a significant role in driving economic policies and outcomes of the U.S. government. The paper was presented to the annual meeting of the Society of Government Economists in Washington, D.C. in November 2013