RELIGION AND HAPPINESS

SECTION 5
Ricardo Perez-Truglia Political Economy of Religion

Introduction
Economists use money as sufficient statistic for welfare.
Very useful in some contexts: e.g. if a policy increases everyones income, then it is desired.

Tricky in some other contexts, like if preferences are endogenous.

Example 1: internal habits (i.e. rat race). Example 2: preference depends on culture, and culture depends on actions (e.g. rastafari equilibrium).

Religion is one of these scenarios.

An stylized model
Income M; happiness depends on own consumption, x1, and the consumption of a poor individual, x2. Happiness production function:
Religious: a_r1*ln(x1)+a_r2*ln(x2) Lay: a_l1*ln(x1)+a_l2*ln(x2)

If a_r1/a_r2 < a_l1/a_l2, then model predicts that own consumption is lower for religious person:

a x1 = j M j a1 + a 2

j 1

An stylized model
Also, individual js happiness is:
j a1ja 2 2 ln (M ) + ln j 2 (a + a j ) 1 2

Comparison can go either way:

In church you enhance a consumption experience (i.e. a_r1=a_l1 and a_r2>a_r2), then religious happier. In church you are told to be embarrased about own consumption (i.e. a_r1<a_l1 and a_r2=a_r2), then religious people less happy. We can also add the non-pecuniary benefits of going to church, R.

Subjective Well-Being
Super important question is whether religion makes people happier.
E.g.: works as punishing selfish behavior or as rewarding other-regarding behavior.

Very difficult to do it convincingly with revealedpreference method. Subjective well-being literature may be helpful.
Survey questions like are you happy?, are you satisfied with your life? An early contribution

Introduction

According to Liza Simpson: "As intelligence goes up, happiness goes down. See, I made a graph. I make lots of graphs." The Simpsons, Episode 257.

Subjective Well-Being
Debate: do these questions mean anything useful to economists? Some usual problems: Confirmatory bias (e.g. you think that since you are poor you probably feel worse than others) Scaling (i.e. do we feel the same by 8?) Ordinality vs cardinality. Many of those problems can be dealt with econometric tools (e.g. ordinality with ordered probit models).

Subjective Well-Being
Qualitative validations tests of happiness data. Happiness scores correlate with expected sign with:
Neurological measures (e.g. Urry et al., 2004). Third party evaluations (e.g. Sandvik et al., 1993). Aggregate suicide rates (e.g. Di Tella et al., 2003). Emotional expressions (e.g. Sandvik et al., 1993). Dollar value of state amenities ()

Also good test-retest correlation (Krueger and Schkade, 2008), and people want to be happy (Benjamin et al., forthcoming AER).

Subjective Well-Being
Critique: would people use the Rolling Stone Index (RSI) if it was correlated to those things? In a paper of mine, I take an step forward and test whether decision and reported utility are the same:
Decision Utility Reported Utility

Subjective Well-Being

Subjective Well-Being

Subjective Well-Being

Subjective Well-Being

Subjective Well-Being

Religion and Happiness

Basic questions:
Does religion improve happiness? Is the improvement due to a change in behavior, a change in preferences, or both?

Other interesting questions: How does the religion-happiness gradient vary over religions? (e.g. over fundamentalism) Is the religion-happiness gradient greater in countries with more religion pluralism? Good news: WVS and ISSP have happiness questions!