Religion is about Religion: Re-Theorizing Religious Club Goods

Taking another look one of the most important models in the economics of religion.

Image from ChatGPT

Anyone who has dabbled in the economics of religion has passing familiarity with the “club model of religion”. Larry Iannaccone’s (1992) paper “Sacrifice and Stigma: Reducing Free-riding in Cults, Communes, and Other Collectives” is the first to forward this approach, but many others have adapted the basic model to various contexts.¹ The model gives a simple explanation of why individuals voluntarily opt into strict religious groups. Why do people sacrifice their time and resources to be a member of a religious sect, and why do strict groups have an incentive to stigmatize those who do not?

These oddities can be explained if we treat religious goods as “club goods”. It is possible to prevent someone from using a club good (it is excludable), and one person’s use of the good does not diminish anyone else’s (it is non-rival). Club goods are subject to a free-rider problem. When club members cannot monitor or mandate the degree to which other club members contribute to the club, members have no incentive to dedicate their own time and resources. Strictness, that is, requirements to abstain from consumption outside the club in order to remain a member would have to effects that mitigate free-riding. First, for people inside the club, the cost of sending your resources elsewhere is more costly. Getting caught would mean ostracization from an entire realm of your life. Second, only the most devout individuals would be willing to make the sacrifices in the first place, and thus stricter clubs select for more committed members. These basic dynamics have a number of obvious applications to religious sects that despite their strict requirements retain a healthy and committed membership.

There are two problems with the club goods model as applied to religion.

1. It does not only apply to religion.² Though religious communities may utilize or depend on club goods, they are far from the only groups to do so. This prompts the further question of what exactly we mean by religion (more on that later).

2. It is not clear how critically religious groups depend on excludable club goods.³ The examples typically cited are a church potluck or other collectively produced distributions of resources, but these are not uniquely religious, nor do they seem to be the primary good that individuals receive from religious participation. Low resource or effort contribution might be balanced out with a large number of contributors, but Iannaccone explicitly makes his club model insensitive to club size. These perspectives make it appear as if the primary reason that individuals join a religious community is for the material goods they gain access to and that the religious doctrine serves as an (unnecessary?) justification for the sacrifices required.

I want to offer a theory that explains why club goods might uniquely apply to religious communities in a way that makes those club goods part of the critical reason that individuals join the group. I am re-theorizing and not building a rival model. I mean to flesh out the meaning of the terms in the model but not to change their relationship. I think the patterns that they form are solid and are revelatory of some basic intuitions, but that the literature has lost some grip on what they might refer to. My re-theorizing hopes to make those intuitions more clear and point the economics of religion in a direction that emphasizes phenomena that are more unique to religion and not just any club good.

The aspect that I claim is both unique to religion and gains its quality assurance due to club strictness is religious doctrine itself. It is fashionable to harp on about the communal and social benefits of religious communities in contrast to the more cerebral or propositional creeds or canons of faith. While the social benefits of religion may have been underemphasized in the past, it remains true that religious teachings (and related spiritual and moral practices) are what make religious communities distinct. Doctrines also fit the club good description. One can still be potentially excluded from the community, but my belief in a doctrine does not crowd out your belief in the same. Further, they are often critical inputs into community organization, defining how congregants should relate to one another as well as how they should act outside the church and how all of that is related towards God (or their equivalent of the transcendent).

The tricky thing about doctrine is that it is very difficult to assess its quality. Essentially, how true it is. In many cases, proper doctrines are passed down over time, are carefully crafted by scholars, or even granted by divine revelation. In any of these cases, it is hard for the lay member of the community to properly assess the rightness of the doctrine, both in the sense that it contains some eternal truth, and that it is efficacious when put into practice. Like in the club model, the quality of the product cannot be directly observed before it is purchased. What goes into the production function for high quality doctrine is elusive, but like in the club good model it is possible that one can assess the quality by indirect means. By requiring sacrifice of club members, I am ensuring that they spend less time outside the club where they could potentially hold interests that would make them promote doctrines with interests outside the church in mind. By ensuring that club members receive fewer benefits from outside the club, I am not only ensuring that they spend more of their time and resources in the club, but also that their contribution is not corrupted by ulterior motives.

Consider the purpose of a chemical laboratory. The final product of the lab is some sort of research report. The report either reflects the truth or it does not. A reader can verify certain extant claims of the paper, check the arithmetic, and read for logical consistency, but they can’t know exactly how the data in the paper was generated. Were the beakers clean? Did the lab technicians wash their hands? Did they make proper measurements? Were experiments done in proper isolation? If the lab technicians are routinely exiting the lab and engaging in outside behaviors, they may track in unobservable bacteria that biases the results of the test. If the protocols of the laboratory were too relaxed, the average reader would have less confidence in the care of the researchers and thus in the truth of the study.

My cousin works in a bio-chemical research laboratory. To gain access as a graduate student, she needs to be reviewed by the university as well as take time-intensive FDA required safety training modules. These costs, in addition to the intense hours required of graduate students, signal their commitment to the quality of work done in the laboratory. Grad school takes up so much of their time, that they have few other social engagements constantly drawing them away from their focused studies. All of these costs together serve as a screening mechanism for students who are interested in high-quality work out of respect for their own desire to seek the truth. There is a reason that even somewhat regularized laboratory tasks are not outsourced to minimum wage laborers, even if the work can be easier than a late night fast food gig.

Another example, perhaps more directly pertinent to religious communities, is textual interpretation. A truly profitable reading of a text requires impartiality. If some council tasked with interpreting the meaning of a text was staffed with individuals who were routinely engaged in other political, economic, or ideological commitments, their interpretation may come out biased, especially if these other commitments benefit in some way from a particular interpretation of the text when it is put into practice. If we were to isolate the interpreters, we would eliminate at least some of the major sources of partiality. The obvious issue with such a scheme is that one cannot interpret a text in isolation. You must allow some sort of historical or philosophical lens to frame interpretation (they must at minimum know the language). It is very hard to open the gate to these proper outside influences without letting in the improper ones. In many cases, the nature of the sacrifices aim to cut out as many bad influences but keep access to good ones. A celibate cleric for example can make a judgment more lenient towards sexual activity without being accused of being a beneficiary of the new dispensation.⁴ Clerics who are not dependent on political patrons, can legitimize a regime without accusations of clientelism. The particular doctrine in concern will be more or less sensitive to the need for knowledge outside the community. When the text and basic reading comprehension are sufficient, cloistered monks can divine the text, but a more involved judgment, such as the decision to relocate a church building, may require political connections and the democratic vote of the parish.

There still remains a difficult tradeoff (which I go into here) between access to the world and the various benefits it affords, both in producing well-informed doctrines and general consumption. Consider a biblical scholar who can choose whether or not to say that there is a solid interpretation of the Bible that includes Darwinian evolution. It may be hypothesized that he is also a professor who wants to stay in good standing with his atheistic academic colleagues at the University of Science where he holds a position. Sacrificing such a prestigious and potentially lucrative position for a lower-paying lower-prestige position at HillFaith Bible College would put his interpretation of the Bible, whether it included evolution or not in more credible standing with the population. Naturally, however, those scholars who do believe a proper interpretation of the Bible excludes Darwinian evolution, and thus disbelieve in evolution, will find a lower opportunity cost of going to HillFaith as they would not be highered at the University of Science in any case. The high prevalence of creationists among those that separate themselves from prestige positions, may not be a credible signal of what the unbiased interpretation is.

I also believe this approach to religious prohibitions appeals to the more common interpretation of why strict churches are strong. People believe they are buying into something that will remain stable for a longer time period and is providing them a more reliable source of tradition. When people say that they want their children raised in a good church, do they simply mean one in which all the members put in a good deal of effort? They usually want to make sure their child’s spiritual formation is sound. If their Sunday school teacher is hired off the street to read a slideshow about the book of Jonah, parents do not feel assured that the teacher won’t embellish or add details to pass the time. If the other families at the church are spending most of their time in the church community, it’s less likely a child will fall in with the wrong crowd because of someone they meet at church. Beyond raising kids, honest adults know that they too are in need of spiritual formation, and in a sense are trying to subject themselves to the same good influence.

A focus on doctrine also explains why religious restrictions are often held asymmetrically for different members. Pastors, priests, and leaders who are either generating doctrines or are in the business of interpreting them have more requirements placed on them, or are at least scrutinized more carefully according to the standard rules. Naturally, these requirement should get stricter and the scrutiny should get tighter the closer a cleric is to some source of partiality. If their position is somehow dependent on political patronage, the leader will make costly signals that they are separate from politics to maintain a trust in the quality of their judgments. So why do entire communities have to follow strict religious codes? Why can’t I just get my doctrine from an ascetic preacher, and get the rest of my communal benefits piecemeal on the market? First, because a lot of the traditional more material interpretation of club goods still do apply to religious communities. Second, because preachers may specialize in one aspect of doctrine production, but the whole community plays a part as well. They relay, respond to, and apply the same doctrines. Further, if the members of the community are all consuming according to market prices with standard secular preferences, some individual may fear that the congregation will riot against totally legitimate doctrine and eject a pious and trustworthy pastor.⁵ Still, the relative importance of restrictions on the leader against the laity with respect to doctrine production still remains.

Regularization and codification of religious belief is also a means of assessing the quality of doctrine. In some situations, one simply can monitor and meter the degree to which one contributes to the club good. In those cases, simply requiring a certain contribution for club membership would overcome the free-rider problem. If one could sufficiently summarize the tenets of some tradition, then one could use direct means to evaluate the quality of teaching. Did everything the pastor say line up with what’s in our creed? Is his position “biblical”? An entire worldview however, much less a description of an incomprehensible God, cannot be summarized in words. Every creed written will always be incomplete on some margin. Creedal incompleteness is part of what necessitates a trusted hierarch to fill these coordination gaps. When it is possible to codify a traditional belief in order to serve as a measure against a leader, that may be wise, but it can never be the only answer. Some degree of sacrifice to give the hierarchy credibility will likely be necessary.

Treating the primary club good as doctrine interprets the club model of religion in a way that is unique to religion, but also includes all of the other insights developed in application of the model to physical production of club goods. I suppose that what I call religion here is applicable to any text-interpretation and doctrine production. Alas, we’ll just have to include all such activities in our broad definition of religion. So much the worse for those who want to demarcate religious belief from secular knowledge. The real question we should be asking is why knowledge production is sometimes bundled with these other activities that regularly are called “religious” that is rituals, eating, charity, art, etc. Perhaps these are all complementary inputs to a higher human virtue and knowledge production of which the production function remains a mystery.

1. For a good summary of the various insights that have come out of this model over the years see Carvalho, Jean Paul. 2020. “Sacrifice and Sorting in Clubs.” Forum for Social Economics 49 (4): 357–69. https://doi.org/10.1080/07360932.2015.1125383.

2. Mark Koyama notes this in his review of Paul Seabright’s book The Divine Economy.

3. This was Peter Leeson’s primary complaint when we covered the paper in his class on non-market decision-making.

4. Some traditions who have eschewed religious celibacy for clergy posit that a lack of experience with marriage or sex, prevents one from properly judging those matters. Similarly, the absence of women from interpretation is claimed to bias readings in favor of men.

5. I realize at this point that I slipped into casually using mostly Christian terms in my examples. Force of habit.