Three essays on the economics of religion and politics

This dissertation contains three essays on the economics of religion and politics. In the first essay, we model both the religious competition among denominations and the political competition among parties. The model's propositions provide the first formal economic explanation for the 'Culture Wars' thesis. In particular, the model seeks to explain the reason why liberal or less strict denominations tend to favor higher government taxes, higher government spending and 'bigger' governments, while conservative or stricter denominations tend to favor lower government taxes, lower government spending and 'smaller' governments. This is due to the fact that conservative denominations demand high levels of commitment from their adherents in the form of monetary and time contributions and as such their adherents will be less willing to allocate resources to the government in the form of taxes. Liberal denominations on the other hand demand lower levels of commitment from their adherents which means that their adherents are more willing to allocate resources to the government. We show that any change in the objectives of the denominations will have an impact on their religious teachings, which in turn will affect the behavior of their adherents in the political and economic arenas.;In the second essay, we formally examine the relationship between religious nonprofits and the public sector with the primary aim of studying the impact of this relationship on religion in society. In the model, we provide a rationale for why the government may choose to award the funds to a religious charity. If a religious charity is awarded the exclusive right to provide the social service, it will seek to utilize this opportunity in order to proselytize its particular religious doctrine to non-adherents through several means. The model postulates that the utility of the religious clergy of the denomination(s) awarded the funds will increase, since they can now preach to a larger group of individuals. Based on the concept of compensating wage differentials, the clergy are therefore willing to reduce their supply price in order to get that extra utility. This active proselytizing alters the religious preferences of believers in the population and leads to a change in the relative powers of the different denominations and the religious nature of the society as a whole. The paper discusses the implications of these results with regards to recent policies such as the Faith-Based and Community Initiatives.;In the third essay, we empirically test the relationship between religious and economic preferences that we developed in the rational choice model of our first essay. We test using US state data, whether changes in states' religious composition over time influences states' tax rates. We use church membership rates and religious contributions by households as alternative measures of a state's religiosity level. We employ both a first-differencing and a fixed effects approach. Our paper does not report any significant relationship between government tax rates and the religiosity of the population. However, the results do not reject our hypothesis, but only fail to support it. As such, we attempt to explain the causes of our findings and suggest possible future methods to reexamine the issue more deeply and extend the analysis further.