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Divine Innovation: Religion and Service Provision by Religious Organizations in India


  • Iyer, S.
  • Velu, C.
  • Xue, J.
  • Chakravarty, T.


This paper examines innovations to religious and non-religious service provision by religious organizations in India. We present a stylized Hotelling-style model in which two religious organizations position themselves at opposite locations to differentiate themselves on the religious spectrum in order to compete to attract adherents. Moreover, the model predicts that economic inequality can make both organizations increase their provision of non-religious services to retain adherents. In order to test our propositions, we present unique primary survey data on the economics of religion that we have collected from 2006-2008 on 568 Hindu, Muslim, Christian, Sikh and Jain religious organizations spread across seven Indian states. We use these data to provide qualitative and descriptive statistics from the survey that is consistent and provides initial support for our propositions. We show that these organizations have substantially increased their provision of religious and non-religious services, but that there are significant variations by religion. We also provide quantitative evidence based on econometric testing to highlight that Indian religious organizations are maximizing the differences in their ideology with respect to other organizations, and are also providing higher education and health services as economic inequality increases in India.

Suggested Citation

  • Iyer, S. & Velu, C. & Xue, J. & Chakravarty, T., 2011. "Divine Innovation: Religion and Service Provision by Religious Organizations in India," Cambridge Working Papers in Economics 1135, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1135

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    References listed on IDEAS

    1. Steven N. Durlauf & Andros Kourtellos & Chih Ming Tan, 2012. "Is God in the details? A reexamination of the role of religion in economic growth," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(7), pages 1059-1075, November.
    2. Iannaccone, Laurence R & Finke, Roger & Stark, Rodney, 1997. "Deregulating Religion: The Economics of Church and State," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 350-364, April.
    3. Dehejia, Rajeev & DeLeire, Thomas & Luttmer, Erzo F.P., 2007. "Insuring consumption and happiness through religious organizations," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 259-279, February.
    4. Stark, Rodney & Iannaccone, Laurence R & Finke, Roger, 1996. "Religion, Science, and Rationality," American Economic Review, American Economic Association, vol. 86(2), pages 433-437, May.
    5. Laurence R. Iannaccone, 1998. "Introduction to the Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1465-1495, September.
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    Cited by:

    1. Iyer, Sriya & Velu, Chander & Mumit, Abdul, 2014. "Communication and marketing of services by religious organizations in India," Journal of Business Research, Elsevier, vol. 67(2), pages 59-67.
    2. Mugdha Vaidya & Meghna Katoch & Nabanita Datta Gupta, 2015. "The Impact of Household Participation in Community Based Organizations on Child Health and Education in Rural India," Economics Working Papers 2015-08, Department of Economics and Business Economics, Aarhus University.

    More about this item


    Economics of Religion; Service Provision; Hotelling Model; Inequality; India;

    JEL classification:

    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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