Dissecting the act of god: an exploration of the effect of religiosity on economic activity

This research explores whether religiosity has a persistent effect on economic outcomes. We follow a three-step analysis. First, we use a sample of migrants in the United States to establish that religiosity in the country of origin has a lasting effect on the religiosity of migrants. Second, by exploiting variation in the inherited component of religiosity of migrants and controlling only for a baseline set of controls, we uncover a causal link between several aspects of religiosity and income level. The empirical findings of the second step suggest that i) church attendance has a positive impact on income; and ii) stronger faith is associated with a higher income. Finally, we augment the set of controls included in the measure of inherited religiosity in order to capture the effects of social capital, education, and of traits conducive to income growth. When controlling for social capital, the effect of religious attendance on economic outcomes vanishes, and when controlling for the presence of traits conducive to growth, the effect of intensity of faith vanishes as well. We therefore conclude that when properly accounting for unobservables, religiosity does not affect per capita income.