Is Religion an Inferior Good? Evidence from Fluctuations in Housing Wealth


The question of whether religious activities decline with economic development has been actively debated in sociology and economics for centuries. We address this question exploiting house price fluctuations in the U.S. in the early 2000s. We show that an increase in local house prices is associated with a decline in time spent on religious activities for homeowners relative to renters. This effect is not present for volunteering and civic activities. The main result is driven by a wealth effect, whereby activities that have an inferior-good component decline with housing wealth, and by a substitution effect whereby the attractiveness of activities linked to the residential asset increases during housing booms.

Journal of Economic Behavior and Organization