The cost of intolerance
Dec 2021
The cost of intolerance
Religious intolerance reduces economic performance and slows down knowledge creation. These effects may be reflected in the level of prosperity. A commentary by Joachim Voth.
This article was originally published in the newspaper «Finanz und Wirtschaft» on 20 September 2021. Translated and edited for layout purposes by the UBS Center.
Religious freedom is a fundamental human right, but in many countries around the world it simply does not exist, not even on paper. With the return of the Taliban, a rigid interpretation of Islam is once again central to politics and society in Afghanistan. In some places - such as North Korea - all religion is banned; elsewhere, such as Saudi Arabia, only one is allowed. Because about 57% of the world's population currently lives in countries where citizens are persecuted for their faith, the economic consequences of religious intolerance deserve consideration as well.
That religion and economic development are closely linked is not a new idea. More than a hundred years ago, Max Weber had already written a sensational article in which he argued that the faith system of some Protestant religious communities had been useful for the economic development of England in the early modern period.
The question of which religion is particularly good for growth cannot be answered unequivocally. Catholic and Protestant countries, Muslim and Confucian can grow rapidly. Increasingly clear are the consequences of religious intolerance and rigid indoctrination. A detailed look at the history of individual countries and regions is helpful. Analyzing differences in prosperity between nations has fallen somewhat out of fashion in economics, for good reason: Too many things differ from country to country.
The standard studies, still popular twenty years ago, which attempted to determine the influence of one factor (be it Protestantism, be it a high trade share) by taking the cross-section of all gross national product figures, have proven to be of little help. Instead, the focus is on studies within individual countries or on regions that are close to each other.
Religious intolerance reduces economic performance and slows down knowledge creation. These effects may be reflected in the level of prosperity. A commentary by Joachim Voth.
This article was originally published in the newspaper «Finanz und Wirtschaft» on 20 September 2021. Translated and edited for layout purposes by the UBS Center.
Religious freedom is a fundamental human right, but in many countries around the world it simply does not exist, not even on paper. With the return of the Taliban, a rigid interpretation of Islam is once again central to politics and society in Afghanistan. In some places - such as North Korea - all religion is banned; elsewhere, such as Saudi Arabia, only one is allowed. Because about 57% of the world's population currently lives in countries where citizens are persecuted for their faith, the economic consequences of religious intolerance deserve consideration as well.
Joachim Voth, UBS Foundation Professor of Macroeconomics and Financial Markets
The Inquisition and its consequences
The effects of religious intolerance can therefore be nicely observed with the help of a few examples. In Spain, the Inquisition was introduced in 1480, aimed at eradicating alleged faithlessness. For this purpose, the entire country was strewn with tribunals, which sent reports of their activities to Madrid every year. During periodic visits of the inquisitors, the faithful were asked to confess their sins - and also to share those of their neighbours. If accusations came in, the investigation continued, if necessary with instruments of torture. In the worst cases, a public burning of the heretic followed, an act on a grand stage aimed at intimidation.
The Spanish Inquisition operated for over 300 years, until 1820. In total, some 67,000 trials were carried out. In some areas it prosecuted many people, in others a smaller number. The reasons for this have less to do with the fact that there were more witches or adherents of clandestine confessions in certain places than elsewhere, but rather with the Inquisition’s financing model: It had to finance itself through fines and the confiscation of the assets of "guilty" persons. As a result, it was mainly successful businessmen, lawyers, financiers and doctors who fell into the clutches of the Inquisition. The foundations of a bourgeois society, as it was about to develop in the rest of Europe during the early modern period, were therefore gravely undermined in Spain. The richer a city or region was, the more "attention" it received from the Inquisition.
What are the consequences? If you look at Spain today, regions with particularly high levels of persecution by the Inquisition are still significantly poorer than those with no criminal trials. On average, incomes in the worst-affected municipalities are €1450 lower than those in unaffected towns, nearly 200 years after the Inquisition was abolished. Today, the shadows of persecution cost Spain an estimated €800 per inhabitant each year.
The effects of religious intolerance can therefore be nicely observed with the help of a few examples. In Spain, the Inquisition was introduced in 1480, aimed at eradicating alleged faithlessness. For this purpose, the entire country was strewn with tribunals, which sent reports of their activities to Madrid every year. During periodic visits of the inquisitors, the faithful were asked to confess their sins - and also to share those of their neighbours. If accusations came in, the investigation continued, if necessary with instruments of torture. In the worst cases, a public burning of the heretic followed, an act on a grand stage aimed at intimidation.
The Spanish Inquisition operated for over 300 years, until 1820. In total, some 67,000 trials were carried out. In some areas it prosecuted many people, in others a smaller number. The reasons for this have less to do with the fact that there were more witches or adherents of clandestine confessions in certain places than elsewhere, but rather with the Inquisition’s financing model: It had to finance itself through fines and the confiscation of the assets of "guilty" persons. As a result, it was mainly successful businessmen, lawyers, financiers and doctors who fell into the clutches of the Inquisition. The foundations of a bourgeois society, as it was about to develop in the rest of Europe during the early modern period, were therefore gravely undermined in Spain. The richer a city or region was, the more "attention" it received from the Inquisition.
Traditional attitudes
How can this be? How can the geography of religious intolerance hundreds of years ago still be reflected in the prosperity of citizens today? The most affected regions lack many things that make economic life better. For example, the level of education is much lower, regardless of the number of inhabitants. People are more religious, but they trust each other much less than elsewhere. Education, trust and trustworthiness, however, are essential to the economic process. Where educated people can cooperate more easily, the economy thrives; where poorly educated citizens eye each other suspiciously before starting any project, poverty is common. The systematic targeting of the educated and wealthy by the Inquisition continues to cast its shadow over the present; the incentives to betray one's neighbour are still reflected in lower levels of trust today. That such patterns can be transmitted across centuries is a relatively new insight in economics. Similar patterns exist in many parts of the world, from educational behaviour to the willingness to cooperate to risk aversion and the tendency to exclude. In most cases, the transmission of attitudes from parents to children is an important factor; where mobility is low, much often remains the same in the same place.
How can this be? How can the geography of religious intolerance hundreds of years ago still be reflected in the prosperity of citizens today? The most affected regions lack many things that make economic life better. For example, the level of education is much lower, regardless of the number of inhabitants. People are more religious, but they trust each other much less than elsewhere. Education, trust and trustworthiness, however, are essential to the economic process. Where educated people can cooperate more easily, the economy thrives; where poorly educated citizens eye each other suspiciously before starting any project, poverty is common. The systematic targeting of the educated and wealthy by the Inquisition continues to cast its shadow over the present; the incentives to betray one's neighbour are still reflected in lower levels of trust today. That such patterns can be transmitted across centuries is a relatively new insight in economics. Similar patterns exist in many parts of the world, from educational behaviour to the willingness to cooperate to risk aversion and the tendency to exclude. In most cases, the transmission of attitudes from parents to children is an important factor; where mobility is low, much often remains the same in the same place.
Religion can both drive and hinder development
Other studies also show how religious intolerance can hinder the production of knowledge. The Inquisition across Catholic Europe put books on the "index" - the list of forbidden writings. Growth subsequently weakened wherever a particularly large number of books were placed in the banned cabinet. In 19th-century France, wherever the Catholic Church dominated schools and promoted an ideology hostile to science and progress, it was difficult to adopt the technologies of the second industrial revolution, which required significantly more science and an educated workforce.
Religion can also bring people together. The "invention" of the great gods - omniscient and omnipotent divine figures in the great monotheistic religions - was accompanied by a surge in the complexity of societies. This is not surprising: those who can be rewarded with eternal salvation or threatened with eternal damnation have one more reason to do the right thing. But a look at history shows that these potentially positive effects of religious faith can be turned into the opposite where religious conformity is forced upon the population.
Other studies also show how religious intolerance can hinder the production of knowledge. The Inquisition across Catholic Europe put books on the "index" - the list of forbidden writings. Growth subsequently weakened wherever a particularly large number of books were placed in the banned cabinet. In 19th-century France, wherever the Catholic Church dominated schools and promoted an ideology hostile to science and progress, it was difficult to adopt the technologies of the second industrial revolution, which required significantly more science and an educated workforce.
Religion can also bring people together. The "invention" of the great gods - omniscient and omnipotent divine figures in the great monotheistic religions - was accompanied by a surge in the complexity of societies. This is not surprising: those who can be rewarded with eternal salvation or threatened with eternal damnation have one more reason to do the right thing. But a look at history shows that these potentially positive effects of religious faith can be turned into the opposite where religious conformity is forced upon the population.
Quote
The hardest-hit regions lack many of the things that make economic life better.
Joachim Voth
Contact
UBS Foundation Professor of Macroeconomics and Financial Markets
Joachim Voth received his PhD from Oxford in 1996. He works on financial crises, long-run growth, as well as on the origins of political extremism. He has examined public debt dynamics and bank lending to the first serial defaulter in history, analysed risk-taking behaviour by lenders as a result of personal shocks, and the investor performance during speculative bubbles. Joachim has also examined the deep historical roots of anti-Semitism, showing that the same cities where pogroms occurred in the Middle Age also persecuted Jews more in the 1930s; he has analyzed the extent to which schooling can create radical racial stereotypes over the long run, and how dense social networks (“social capital”) facilitated the spread of the Nazi party. In his work on long-run growth, he has investigated the effects of fertility restriction, the role of warfare, and the importance of state capacity. Joachim has published more than 80 academic articles and 3 academic books, 5 trade books and more than 50 newspaper columns, op-eds and book reviews. His research has been highlighted in The Economist, the Financial Times, the Wall Street Journal, the Guardian, El Pais, Vanguardia, La Repubblica, the Frankfurter Allgemeine, NZZ, der Standard, der Spiegel, CNN, RTN, Swiss and German TV and radio.
UBS Foundation Professor of Macroeconomics and Financial Markets
Joachim Voth received his PhD from Oxford in 1996. He works on financial crises, long-run growth, as well as on the origins of political extremism. He has examined public debt dynamics and bank lending to the first serial defaulter in history, analysed risk-taking behaviour by lenders as a result of personal shocks, and the investor performance during speculative bubbles. Joachim has also examined the deep historical roots of anti-Semitism, showing that the same cities where pogroms occurred in the Middle Age also persecuted Jews more in the 1930s; he has analyzed the extent to which schooling can create radical racial stereotypes over the long run, and how dense social networks (“social capital”) facilitated the spread of the Nazi party. In his work on long-run growth, he has investigated the effects of fertility restriction, the role of warfare, and the importance of state capacity. Joachim has published more than 80 academic articles and 3 academic books, 5 trade books and more than 50 newspaper columns, op-eds and book reviews. His research has been highlighted in The Economist, the Financial Times, the Wall Street Journal, the Guardian, El Pais, Vanguardia, La Repubblica, the Frankfurter Allgemeine, NZZ, der Standard, der Spiegel, CNN, RTN, Swiss and German TV and radio.