Religion and Preferences for Social Insurance

Abstract

In this paper we argue that religion and welfare state spending are substitute mech - anisms that insure individuals against adverse life events . As a result , individuals who are religious are predicted to prefer lower levels of social insurance than will individuals who are secular . To the extent policy outcomes reflect individual pref - erences , then countries with higher levels of religiosity should have lower levels of welfare state spending . In formalizing our argument we also suggest that if benefits from religion are subject to a network externality (I derive greater plea - sure from religion when others are also religious) , it is possible for countries that are similar in terms of underlying conditions to exhibit multiple equilibria with respect to religion and social insurance . We empirically test our predictions using individual - level data on religiosity , individual - level data on social insurance pref - erences , and cross - country data on social spending outcomes . The findings are strongly supportive of our hypotheses . One of the major puzzles for political economy involves the question why some govern - ments adopt policies that intervene heavily to redistribute income from rich to poor and to provide social insurance against adverse events , while other governments do much