Does Religion Affect Economic Growth and Happiness? Evidence from Ramadan
We study the economic effects of religious practices in the context of the observance of Ramadan fasting, one of the central tenets of Islam. To establish causality, we exploit variation in the length of the fasting period due to the rotating Islamic calendar. We report two key, quantitatively meaningful results: 1) longer Ramadan fasting has a negative effect on output growth in Muslim countries, and 2) it increases subjective well-being among Muslims. We then examine labor market outcomes, and find that these results cannot be primarily explained by a direct reduction in labor productivity due to fasting. Instead, the evidence indicates that Ramadan affects Muslims' relative preferences regarding work and religiosity, suggesting that the mechanism operates at least partly by changing beliefs and values that influence labor supply and occupational choices beyond the month of Ramadan itself. Together, our results indicate that religious practices can affect labor supply choices in ways that have negative implications for economic performance, but that nevertheless increase subjective well-being among followers.
We thank Alberto Abadie, Daron Acemoglu, Alberto Alesina, Robert Barro, Marianne Bertrand, Davin Chor, Decio Coviello, QA Do, John Friedman, Bernard Gauthier, Paola Giuliano, Ed Glaeser, Rick Hornbeck, Asim Khwaja, Robert Lawrence, Nathan Nunn, Rohini Pande, Torsten Persson, Jesse Shapiro, Andrei Shleifer, Nico Voigtlander, and Katia Zhuravskaya for very helpful conversations, participants at the NBER Political Economy Meeting, the "Institutional Challenges in Emerging Economies'' conference at SITE Stockholm, and the 2013 NEUDC conference, and seminar participants at Chicago Booth, Chicago Harris, ECARES, HKS, HEC Montreal, PSE, UC Berkeley, and UCLA for many useful comments, and Aletheia Donald for superb research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Filipe Campante & David Yanagizawa-Drott, 2015. "Does Religion Affect Economic Growth and Happiness? Evidence from Ramadan," The Quarterly Journal of Economics, Oxford University Press, vol. 130(2), pages 615-658. citation courtesy of