Journal of Institutional Economics

Research Article

Religion: productive or unproductive?


a1 Department of Finance and Economics, College of Business, Mississippi State University, 312-N McCool Hall, PO Box 9580, Mississippi State, MS 39762, USA

a2 College of Business and Economics, West Virginia University, 1601 University Avenue, Morgantown, WV 26506-6025, USA


In this paper, we investigate the relationships between informal institutions – proxied for by measures of religiosity – and levels of entrepreneurial activity, both productive and unproductive, using cross-section US state-level data. In doing so, we evaluate Baumol's (1990) conjectures on the role of institutions in determining whether entrepreneurs will channel their efforts toward wealth-generating activities or toward zero- or negative-sum rent-seeking. We distinguish between measures of both the belief (e.g., the frequency of prayer) and belonging (e.g., church attendance) that have been stressed by authors such as Barro and McCleary (2003). We find that several religious variables significantly and negatively correlate with a state's productive entrepreneurship score. Alternatively, most religious variables in our data do not correlate significantly with unproductive entrepreneurship. We also find that the percent of individuals reporting as atheist/agnostic is positively associated with productive entrepreneurship.

(Online publication August 28 2013)