Religion and Preferences for Social Insurance

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 muc