The chapter by Jean‑Paul Carvalho surveys and extends the economics‑of‑religion literature, focusing on how costly religious identity functions as a strategic club mechanism. It begins with an illustrative case of the 1967 Summer of Love to motivate the free‑rider problem that plagues collective movements. The author then reviews the canonical religious‑clubs model (Iannaccone 1992, 1994) in which costly entry requirements and participation rules serve two primary economic functions: screening out non‑cooperators and substituting outside activity with club‑good production. Building on identity‑economics (Akerlof & Kranton), Carvalho argues that religious identity also performs four additional strategic roles: (1) social sorting – using costly markers to assort individuals with similar “economically neutral” traits; (2) esteem maintenance – providing a psychological buffer against relative deprivation and unfulfilled aspirations, illustrated with the Egyptian Islamic revival; (3) religious commitment – using conspicuous symbols such as veiling to bind members to norms even when they operate outside direct monitoring; and (4) cultural transmission – shaping inter‑generational belief formation through club‑structured participation and exclusion, linking to evolutionary models of cultural evolution. The chapter integrates empirical examples (Jewish emancipation, ultra‑Orthodox Jews, Mormons, veiling in Muslim societies) and recent theoretical extensions (choice between time and money contributions, religious capital, competition, dynamics, radicalization). It concludes that all six functions are instances of the theory of the second best, explaining seemingly irrational religious practices as institutional solutions to multiple incentive and externality problems.
Topics
Free‑Rider Collapse of the Summer of Love: A Motivating Narrative
A historical vignette of the 1967 counter‑cultural movement that illustrates how unrestricted access leads to material and ideological free‑riding, causing the movement’s failure.
Canonical Religious‑Clubs Model: Screening and Substitution
Presentation of Iannaccone’s club framework where costly entry and participation rules screen cooperators and shift resources from outside activities to club‑good production.
Identity‑Economics Bridge: Religious Identity as a Social Category
Integration of Akerlof & Kranton’s identity economics, showing how observable religious markers (dress, speech, diet) create a salient social category that reshapes interaction patterns.
Social Sorting via Costly Religious Markers
Theory that costly, stigmatizing symbols enable groups to assort individuals with similar “economically neutral” traits, stabilizing perfect sorting when membership costs deter cross‑type entry.
Esteem Maintenance: Religion as a Psychological Immune System
Model (Binzel & Carvalho 2017) linking religious participation to coping with unfulfilled aspirations and relative deprivation; explains spikes in religiosity (e.g., Egyptian Islamic revival) as a response to reduced social mobility.
Religious Commitment through Conspicuous Markers (Veiling)
Argument that visible symbols like veiling act as commitment devices, aligning personal behavior with strict religious norms while allowing partial economic integration.
Cultural Transmission and Belief Formation in Religious Clubs
Dynamic model of inter‑generational belief transmission where club strictness, participation requirements, and exclusion solve free‑rider and externality problems in belief production.
Second‑Best Perspective on Religious Practices
Application of the theory of the second best to argue that seemingly inefficient religious rituals are optimal local solutions to multiple systemic inefficiencies.