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Does Religion Affect Economic Growth and Happiness? Evidence from Ramadan

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  • Campante, Filipe

    (Harvard University)

  • Yanagizawa-Drott, David

    (Harvard University)

Abstract

We study the economic effects of religious practices in the context of the observance of Ramadan fasting, one of the central tenets of Islam. To establish causality, we exploit variation in the length of the fasting period due to the rotating Islamic calendar. We report two key, quantitatively meaningful results: 1) longer Ramadan fasting has a negative effect on output growth in Muslim countries, and 2) it increases subjective well-being among Muslims. We then examine labor market outcomes, and find that these results cannot be primarily explained by a direct reduction in labor productivity due to fasting. Instead, the evidence indicates that Ramadan affects Muslims' relative preferences regarding work and religiosity, suggesting that the mechanism operates at least partly by changing beliefs and values that influence labor supply and occupational choices beyond the month of Ramadan itself. Together, our results indicate that religious practices can affect labor supply choices in ways that have negative implications for economic performance, but that nevertheless increase subjective well-being among followers.

Suggested Citation

  • Campante, Filipe & Yanagizawa-Drott, David, 2013. "Does Religion Affect Economic Growth and Happiness? Evidence from Ramadan," Working Paper Series rwp13-052, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp13-052
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    Cited by:

    1. Spenkuch, Jörg & Tillmann, Philipp, 2014. "Elite Influence? Religion, Economics, and the Rise of the Nazis," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100491, Verein für Socialpolitik / German Economic Association.
    2. Thomas Dohmen & Benjamin Enke & Armin Falk & David Huffman & Uwe Sunde, 2016. "Patience and the Wealth of Nations," Working Papers 2016-012, Human Capital and Economic Opportunity Working Group.
    3. Haucap, Justus & Heimeshoff, Ulrich, 2014. "The happiness of economists: Estimating the causal effect of studying economics on subjective well-being," International Review of Economics Education, Elsevier, vol. 17(C), pages 85-97.
    4. Sriya Iyer, 2016. "The New Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 395-441, June.
    5. M. Kabir Hassan & William J. Hippler, III, 2014. "Entrepreneurship and Islam: An Overview," Econ Journal Watch, Econ Journal Watch, vol. 11(2), pages 170-178, May.
    6. Bahadır Dursun & Resul Cesur, 2016. "Transforming lives: the impact of compulsory schooling on hope and happiness," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(3), pages 911-956, July.
    7. Stefanescu, Răzvan & Dumitriu, Ramona, 2016. "The impact of the Great Lent and of the Nativity Fast on the Bucharest Stock Exchange," MPRA Paper 89023, University Library of Munich, Germany, revised 22 Dec 2016.
    8. Paul-Olivier KLEIN & Rima TURK & Laurent WEILL, 2017. "How Religiosity Shapes Investor Behavior: Sukuk Issuances During Ramadan," Working Papers of LaRGE Research Center 2017-01, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    9. Jeanet Sinding Bentzen, 2019. "Acts of God? Religiosity and Natural Disasters Across Subnational World Districts," Economic Journal, Royal Economic Society, vol. 129(622), pages 2295-2321.
    10. Lo Turco, Alessia & Maggioni, Daniela, 2018. "Effects of Islamic religiosity on bilateral trust in trade: The case of Turkish exports," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 947-965.
    11. Michalopoulos, Stelios & Naghavi, Alireza & Prarolo, Giovanni, 2016. "Islam, inequality and pre-industrial comparative development," Journal of Development Economics, Elsevier, vol. 120(C), pages 86-98.
    12. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
    13. Dierk Herzer & Holger Strulik, 2020. "Religiosity and Long-Run Productivity Growth," Journal of Economics, Management and Religion (JEMAR), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 1-40, July.
    14. Verdier, Thierry & Zenou, Yves, 2018. "Cultural leader and the dynamics of assimilation," Journal of Economic Theory, Elsevier, vol. 175(C), pages 374-414.
    15. Jean-François Carpantier & Anastasia Litina, 2014. "Dissecting the Act of God - An Exploration of the Effect of Religion on Economic Activity," DEM Discussion Paper Series 14-09, Department of Economics at the University of Luxembourg.
    16. Christopher Busch & David Domeij & Fatih Guvenen & Rocio Madera, 2018. "Asymmetric Business-Cycle Risk and Social Insurance," NBER Working Papers 24569, National Bureau of Economic Research, Inc.
    17. Esteban, Joan Maria & Levy, Gilat & Mayoral, Laura, 2015. "Liberty, Religiosity, and Effort," CEPR Discussion Papers 10841, C.E.P.R. Discussion Papers.
    18. Leonardo Bursztyn & Stefano Fiorin & Daniel Gottlieb & Martin Kanz, 2019. "Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment," Journal of Political Economy, University of Chicago Press, vol. 127(4), pages 1641-1683.
    19. Esteban, Joan & Levy, Gilat & Mayoral, Laura, 2019. "Personal liberties, religiosity, and effort," European Economic Review, Elsevier, vol. 120(C).
    20. Haruvy, Ernan & Ioannou, Christos A. & Golshirazi, Farnoush, 2015. "Food Abstention, Religious Observance & Prosocial Behavior: Evidence from Ramadan," Discussion Paper Series In Economics And Econometrics 1507, Economics Division, School of Social Sciences, University of Southampton.
    21. Alessia LO TURCO & Daniela MAGGIONI, 2016. "For God's sake. The impact of religious proximity on firms' exports," Working Papers 418, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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