Church Attendance and Supply-Side Economics

When did supply-side economics come to mean breaking up monopolies to increase competition? I don't know whether increasing competition among churches increases membership or not, and the fact that religion is involved here is coincidental, but this is not supply-side economics as claimed in the article. This is nothing more than the standard result that increasing competition improves market outcomes:

In Europe, God Is (Not) Dead, by Andrew Higgins, WSJ (free): ...After decades of secularization, religion in Europe has slowed its slide toward what had seemed inevitable oblivion. There are even nascent signs of a modest comeback. Most church pews are still empty. But belief in heaven, hell and concepts such as the soul has risen in parts of Europe, especially among the young...

God's tentative return to Europe has scholars and theologians debating a hot question: Why? Part of the reason, pretty much everyone agrees, is an influx of devout immigrants. ... At the same time, anxiety over immigration, globalization and cutbacks to social-welfare systems has eroded people's contentment in the here-and-now, prodding some to seek firmer ground in the spiritual.

Some scholars and Christian activists, however, are pushing a more controversial explanation: the laws of economics. As centuries-old churches long favored by the state lose their monopoly grip, Europe's highly regulated market for religion is opening up to leaner, more-aggressive religious "firms." The result, they say, is a supply-side stimulus to faith.

"Monopoly churches get lazy," says Eva Hamberg, a professor at Lund University's Centre for Theology and Religious Studies and co-author of academic articles that, based on Swedish data, suggest a correlation between an increase in religious competition and a rise in church-going..."

Upstarts are now plugging new spiritual services across Europe, from U.S.-influenced evangelical churches to a Christian sect that uses a hallucinogenic herbal brew as a stand-in for sacramental wine. Niklas Piensoho, chief preacher at Stockholm's biggest Pentecostal church, says even sometimes oddball, quasi-religious fads "tell me you can sell spirituality." His own career suggests that a free market in faith is taking root. ...

The enemy of faith, say the supply-siders, is not modernity but state-regulated markets that shield big, established churches from competition. In America, where church and state stand apart, more than 50% of the population worships at least once a month. In Europe, where the state has often supported -- but also controlled -- the church with money and favors, the rate in many countries is 20% or less.

"The state undermined the church from within," says Stefan Swärd, a leader of Sweden's small but growing evangelical movement. ...

Europe's upstart churches ... are shaking up and in some places reviving the market for religion, argues Rodney Stark, a pioneer of religious supply-side theory at Baylor University in Texas.

Mr. Stark first developed the notion of a "religious market" in the 1980s as a way to explain America's persistent faith. It posits that people are naturally religious but that their religiosity varies depending on the vigor of what he calls religious suppliers. "Wherever churches are a little more energetic and competitive, you've got more people going to church," he says.

The notion that Adam Smith's invisible hand reaches into the spiritual realm has many detractors. Steve Bruce, a professor of sociology at Aberdeen University in Scotland, says market theory "works for cars and soap powder but it does not work for religion." ... The Church of Sweden is also skeptical of the supply-side view. "We don't sell a product," says archbishop Anders Wejryd. ...

A big impetus to the return of faith is fear of the future, says Elisabeth Sandlund, editor of Sweden's main Christian newspaper, Dagen. In Sweden and across Europe, old moorings are coming loose as cradle-to-grave welfare systems buckle. "People want something solid to hold on to," says Ms Sandlund. ...

Whether competition for believers actually boosts belief stirs bitter academic discussion. Measuring religiosity is difficult and each side cites different statistics. The latest data from a major research project that tracks churchgoing and belief in concepts such as God and soul, the European Values Survey, were compiled between 1981 and 1999. (They show a decline in faith in the 1980s followed by a leveling off and, for some indicators, a slight bump in the 1990s.)...

It's the increase in competition that is at work here (if it does in fact increase church attendance), not the supply-side effect of a change in taxes on work effort. There is this:

One factor now spurring religious competition in Europe is the availability of state money that traditionally flowed almost entirely to established churches. It still does, but the process is more open.

In Italy, the state used to pay the salaries of Catholic priests, but in 1984 it began letting taxpayers choose which religious groups get financial support. The proceeds of a new "religious tax" of 0.8% are now divided, according to taxpayer preference, among the Catholic Church, four non-Catholic churches, the Jewish community and a state religious and humanitarian fund.

The result is an annual beauty contest ahead of a June income-tax deadline, as churches try to lure taxpayer money with advertising campaigns. ...

Raising taxes and then distributing the money by a government formula is not what supply-side advocates have in mind, even if it does happen to spur competition among churches for membership. There are distortions associated with subsidies just as there are distortions associated with taxes.

Supply-siders as a group, for the most part, believe in both limited government and that tax changes can affect work effort, and it just so happens that reducing taxes satisfies both the taste for limited government and the taste for supply-side policies. However, only the effect of taxes on effort (or other economic behavior) is supply-side economics. Those who believe in limited government are a much larger group and reside on much broader and firmer ground than the smaller set who believe there are significant supply-side effects from changes in tax rates.

Comments

[K. Williams]

Mark, you're confusing two different meanings of "supply-side." The article is using it in the sense of "focusing on the supply, rather than demand" side of the equation, rather than in the specific political sense you're assuming.

This actually seems quite reasonable: the people he's writing about are interested in churches as suppliers of religious experience, as it were, who are arguing that the choices those suppliers make -- and the structure of their "business" -- have an important impact on how many people in a country identify as believers, go to church, etc. This is a resolutely supply-side theory, and so the label seems quite appropriate. You're letting your politics cloud your reading skills.

[Mark Thoma]

Just the opposite is true. You are confused, so please go learn what supply-side economics is before trying to say what it means, it's a characteristic of economic models of a particular type, not a political argument. The implications of those models are testable, and when they are tested - e.g. by the CBO recently - the kinds of dynamic impacts the models predict are not much in evidence.

And speaking of reading skills, the article is about increasing competition, there is no focus on supply. Of course quantity goes up when competition increases, but that doesn't make it a supply-side argument.

Nice try though.

[robertdfeinman]

I realize this is a newspaper article and thus expecting some citations to the "data" is wishful thinking, however...

The "some parts" of Europe are not the most secular countries of the western block, but are the newcomers like Poland. In addition there are the Muslim immigrants, but they should be treated separately.

Even the data for the US is questionable. Statistics on church attendance can be gathered in one of two ways: asking people and by census. When asked, the numbers are usually in the 45% range, but when head counts of the same churches are taken the number is more like 20+%.

There is a well-known questionnaire effect which makes people under-report things they think are undesirable characteristics and vice versa.

In fact the rise of secularism is still increasing in Europe and there are similar (if smaller) trends in places like Asia and Africa. The US-based Secular Humanist Society, for example, has been opening new branches in countries where the idea would have been unthinkable a decade ago.

As for competition attracting new adherents, that is unproven. What is well-known is that churches that provide more of what people wish attract members away from those which don't. This is why the Pentacostal movement has been growing in Latin America at the expense of the Catholic Church. It is also why there are 1500 different denominations in the US. Without state sponsorship new sects have no barrier to entry into the "market".

[anne]

Thank you for the post and your analysis with which I quite agree, though I find the article inane or mildly offensive which should be no surprise. Who wants to convert me?

[anne]

"God's tentative return to Europe has scholars and theologians debating...."

Jesus buying shoes in Seville.
Mary flouncing in Florence.
Moses looking for rods in Amsterdam.
Isaiah, well, you can only imagine along the Seine.

[anne]

"God's tentative return to Europe...."

God, after all, always being a sort of shy type, quick of temper but that's God after all and we can forgive the quirks or some quirks we can forgive this being God and all. I am still not sure Jonah ever forgave God. Remember, Jonah sitting in the shade and sulking and along came God and, well, you know. Me, I would always take Jonah's part but God has to have sense of humor in those settings and Noah was a singular happening and God promised but you have to get the interpretation right....

[anne]

"Today I saw a red-and-yellow sunset and thought, How insignificant I am! Of course, I thought that yesterday, too, and it rained."

"God's tentative return to Europe...."

Either fits my theology just fine....

[anne]

“Could it not be simply that we are alone and aimless, doomed to wander in an indifferent universe, with no hope of salvation, nor any prospect except misery, death, and the empty reality of eternal nothing?” she asked.

"You wonder why you’re not invited to more parties,” he answered.

[Noni Mausa]

We need to distinguish between two (well, three) definitions of religion: a) religion which effectively teaches people something about the divine (this assumes that there is a divine which can be taught about, something which I happen to believe but you need not) b) an organization which has devised explanations, theories and stories regarding the divine and humanity's recommended posture toward the divine, but without paying attention to whether this teaching is effective, or in fact actively discouraging effective knowledge of the divine when it may happen to arise, and c) an organization which uses a thin veil of reference to the divine to justify its existence and attract followers, while in actual fact being more interested in earthly pursuits such as social power, control of others, maintenance of an enclosed social environment within which the originators can function, etc. etc.

These organizations generally function differently from each other. The second and third variety of religion tend to produce adherence of a more brittle sort -- the very sort of adherence which is most likely to reveal itself to surveys.

The "a" variety, which produces spiritually active people, I believe tends to produce people who are hesitant to declare themselves followers of a particular brand name or trademark.

As you can imagine, this makes the study of the effectiveness of religion for moral, medical, ethical etc purposes, very difficult, unless one has the gall to assign organizations to one or another class of "religion", an act which is likely to make one's life rather uncomfortable.

Noni

[wogie1]

Kind of off point I know, Mark - but your statement reference monopoly "This is nothing more than the standard result that increasing competition improves market outcomes" is standard but a bit sweeping.

Of course I'm thinking of natural monopoly where introducing competition increases costs more than the dadweight loss of monopoly, and reduces welfare. Not many true natural monopolies around -- but the railroad industry is one according to tests in a fairly recent study. If interested, here is the URL:

http://www.fra.dot.gov/downloads/policy/rr_costs.pdf

[Mark Thoma]

No objection to the natural monopoly objection, though as you note there can be big battles when when we try to actually define minimum efficient scale to see what a market will support, and when doctrines such as contestable markets are brought into the discussion the issue is further clouded.

[wogie1]

Contestable market -- yeah, thats what the rail regulator uses to judge rate cases, i.e., hypothetical stand alone cost competitor (tres costly procedure).

MIT's Jerry Hausman doesn't buy it. He says biased against carrier because sunk costs and irreversable investments not dealt with properly.

http://econ-www.mit.edu/faculty/download_pdf.php?id=504

[anne]

Notice an article that we found today but a policy I remarked on at least a year ago, there is a movement to price drugs according to the "value" to patients. Roche mentioned this in the beginning when breaking through the $100,000 yearly cost for a prescription. I do not understand properly, but this may be a new conception of monopoly pricing, pricing against your life.

[anne]

Thinking of religion here....

http://www.nytimes.com/2006/02/15/business/15drug.html?ex=1297659600&en=62aabaec5acffa8c&ei=5090&partner=rssuserland&emc=rss

February 15, 2006

A Cancer Drug Shows Promise, at a Price That Many Can't Pay
By ALEX BERENSON

Doctors are excited about the prospect of Avastin, a drug already widely used for colon cancer, as a crucial new treatment for breast and lung cancer, too. But doctors are cringing at the price the maker, Genentech, plans to charge for it: about $100,000 a year.

That price, about double the current level as a colon cancer treatment, would raise Avastin to an annual cost typically found only for medicines used to treat rare diseases that affect small numbers of patients. But Avastin, already a billion-dollar drug, has a potential patient pool of hundreds of thousands of people — which is why analysts predict its United States sales could grow nearly sevenfold to $7 billion by 2009.

Doctors, though, warn that some cancer patients are already being priced out of the Avastin market. Even some patients with insurance are thinking hard before agreeing to treatment, doctors say, because out-of-pocket co-payments for the drug could easily run $10,000 to $20,000 a year.

Until now, drug makers have typically defended high prices by noting the cost of developing new medicines. But executives at Genentech and its majority owner, Roche, are now using a separate argument — citing the inherent value of life-sustaining therapies.

If society wants the benefits, they say, it must be ready to spend more for treatments like Avastin and another of the company's cancer drugs, Herceptin, which sells for $40,000 a year....

[anne]

This is pricing I call, "hey, Punk, do you feel lucky today?" And, I am not entirely sure but there are indication this sort of pricing is quietly catching on....

http://www.nytimes.com/2007/07/14/business/14drugprice.html

July 14, 2007

Pricing Pills by the Results
By ANDREW POLLACK

Drug companies like to say that their most expensive products are fully worth their breathtaking prices. Now one company is putting its money where its mouth is — by offering a money-back guarantee.

Johnson & Johnson has proposed that Britain's national health service pay for the cancer drug Velcade, but only for people who benefit from the medicine, which can cost $48,000 a patient. The company would refund any money spent on patients whose tumors do not shrink sufficiently after a trial treatment.

The groundbreaking proposal, along with less radical pricing experiments in this country and overseas, may signal the pharmaceutical industry's willingness to edge toward a new pay-for-performance paradigm — in which a drug's price would be based on how well it worked, and might be adjusted up or down as new evidence came in....

[Peter]

I've heard suggested that Economists are essentially theoraticians that are very stubborn and hostile towards those studying under them who challenge their long-held theories. Anyone who doesn't operate within these people's strict guidelines isn't can't get good grades or advance professionally in the field.

If they operated more like scientists, they would welcome such scrutiny, and would have long abandoned the conservative economic model (neoliberalism in Europe); there was a clip from the Clinton-Bush debate in '92 where Clinton stated it best:

"We are operating under a failed economic theory"

[anne]

There was a time when Jack Benny was leaving home and suddenly there was a robber who snarled, "your money or your life." There was no sound, nothing, and then the robber repeated, "your money or your life." Benny then said, "I'm thinking, I'm thinking."

Interesting sort of monopoly pricing.

[gordon]

I can see a connection with supply-side theory in the sense that supply-side theory is essentially an attempt to raise the dead - the dead body of Say's Law.

[BJ Feng]

For Europeans, belief in God has been replaced by belief in government. Why bother asking God for help when you can ask the government instead? And you have to get on your knees to pray to God, how demeaning! With government, you're entitled to receive benefits and need not subjugate yourself, just go in and demand your "rights".

Plus those religious types are just so crass. Religion leads to the belief that there is good and evil, but how can we tell? How dare anyone say that any one system, any one country, is better than another? After all, there's no difference between the killing we do in Iraq and the killing terrorists do elsewhere, right? How can we say anything about anything at all?

[anne]

There is the rare comment that is too offensive to respond directly to or possibly to continue commenting without being acutely ashamed of whoever would would make such a comment.

[lonesome moderate]

This article makes an interesting attempt to redefine supply-side economics as pretty much anything that attempts to increase the supply of goods and services is interesting to me. It seems a bit reminiscent of the techniques that I've seen used to sell complex software packages to audiences that doesn't understand the benefits (or supposed benefits). Essentially, you define the product's benefits using widely understood terms from other fields, and then conflate your incomprehensible product with the comprehensible stuff that the employee knows. The resulting sales pitch often sounds silly to people who do understand the complexities, but since they're a small minority that's no big deal. Here the "product" is a policy, but the technique appears to be the same.

From what I can tell, the author is trying to popularize the concept that, for any instance where people are happier or healthier because of an improved demand for goods and services, this should be seen as a "success of supply side economics". This would then make the voting public more receptive to further tax cuts on the wealthy, becuase of the "proven track record", assuming enough people buy into this sales pitch. Kind of a neat trick, actually.

[steve]

Stark and others omit some obvious economic arguments about cost and benefits. The popular religions espoused by Stark promise salvation if one says the Sinner's Prayer -- essentially stating that Jesus died for your sin, etc. That is the sole cost of achieving salvation. On the other hand, these religions also promise extraordinary benefits. Not just eternal salvation, but also the Gospel of Prosperity, and personal attention and benefits from Jesus.

In other words, popular evangelical Christianity provides a product with minimal cost and great (promised) benefits. It doesn't come with a warranty, however.

[Barry]

Aside from the factors of new countries entering 'Europe', as well as imigrants, there's also the North-South split in Europoe. IIRC, church membership and attendance are higher in the south than the north. IOW, in areas which are very strongly Catholic (or Greek Orthodox), and which have less competition.

Usually this is done as a US-Europe comparision, ignoring intra-Europe. This WSJ article does a comparison over time (if it could even be called that), stil ignoring a cross-section of Europe.