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The Economics of Religion

By Vatsal

Edited by Namitha Sadanand, Associate Editor, The Indian Economist

Understanding how we sell and buy a commodity called ‘faith’                             

According to American sociologist Carl Bankston, the market for religion is a “group of competing firms [that vie for] customers who make rational choices among available products.” In the 21st century, when almost every single aspect of human life (and the environment) has been commoditized and made subject to a deceptive ‘market structure’, we realize that even religion has not been spared. The invisible commodity called faith, is now subject to the invisible hands of this monopolistically competitive market which, like every other market, is created to fulfill human needs and desires. We are consuming every bit of religion and have a lot of closely related products to choose from, based on our own self-interest, tastes and preferences. The basic assumption of economic theory, that every agent acts in order to maximize self-interest, is a characteristic feature of this market as well; heaven/hell are mere incentives (‘buy this faith and you’ll get the returns’). Like all monopolistic market structures, the firms of this market are fiercely competitive and have huge selling costs that glorify their particular brand of faith. Every firm gives the customer an incentive to buy its product- random wishes that shall be fulfilled if the commodity is bought. There is no consumer court to keep check.

When it came to religion, the authorities did not pay heed to Adam Smith’s glorification of free markets (luckily) and were slightly Keynesian in their approach, especially in India. The market for religion, despite being controlled by the same demand and supply mechanisms that control the market for say, tomatoes, is also subject to government intervention. The government has placed certain restrictions in the form of constitutional articles that endow fundamental rights to the customers (if we can have competition laws to promote healthy competition and prevent restrictive trade practices, we can have them in the field of religion as well). Going a step ahead, the Indian Government also revitalizes this market by pushing the aggregate demand for faith at certain times (for its own purposes) by building and destroying religious structures or by appeasing smaller religious firms. Keynesian in its approach, this strategy pushes the demand for religion when the forces of modernity bring it to significantly low levels. We love preventing economic depressions, be it tangible commodities or intangible emotions, so why not try and boost the market?

The supply of faith is relatively inelastic as there is a maximum quantity these limited number of firms can produce, irrespective of demand. In this century, they have reached that optimal and efficient ‘sales maximization’ level. Demand for faith, however has had erratic trends and is usually elastic depending on seasonal preferences of the consumers among other independent variables. The price paid to buy faith has two components- quantifiable (donations, charity, offerings) and unquantifiable (loss of rationality, skepticism and reason). The equilibrium amount of faith sold in the market is found by the intersection of demand and supply curves and when this amount is relatively low and needs to be given a push, the government intervenes, the demand curve shifts rightwards (d to d1) and there- we have more people buying faith and killing reason. (See Graph, below) Negative externalities that manifest themselves as unquantifiable components of price in the form of intolerance, fundamentalism, narrow mindedness and violence might arise due to government intervention. This is when, free markets seem desirable and ‘laissez faire’ becomes the ideal. This is when we realize that intervention in the market for an intangible commodity like faith, can lead to social conflict. This is when we realize, that politics should be kept away from these firms that sell faith on a daily basis.


With the advent of secular theories and modernization in thought, we have come to a situation where many fear the decline of an entire market. The firms in the faith-market are earning lesser profits and certainly attracting lesser customers. While many fear anomie, many welcome reason and quietly witness the fall of the market that has controlled the lives of men since time immemorial. The law of diminishing marginal utility is exhibiting itself, when it comes to faith as well- but that would be an assumptive and irrational statement since the marginal utility obtained from faith can never fall, no matter how modern and secular we become. Human needs and human insecurities shall always make sure that the faith is kept alive as a fall-back commodity and of course, we have the interveners ready to remember Keynes. This is not such a pleasant scenario, for man needs to learn that there are a lot of things-emotions, sentiments and intangible affiliations-that are to be kept away from economics and the market. They should not be converted into money making instruments that has, unfortunately, already been done with religion, faith, morality and God. In such a scenario, there are certain policy recommendations that need to be made-

a)    The firms should be asked by the interveners to leave the market and give an end to its notorious, timeless existence. They should exist as institutions that can collude together and work for the benefit of humanity.

b)    The interveners should make sure that politics is not allowed to intermingle with this market and every policy decision should be kept unbiased. Keynesian ideas should be kept far, far away from this market.

c)     The fundamental rights endowed to the citizens should be treated like verdicts of a consumer court and secular theories should be widely adopted.

The problem is not with faith and religion; nobody should be allowed to take it away from us.  However, Homo religiosus and Homo economicus are not fluid identities, let’s not intertwine the two. Let’s not commoditize faith.

And let us all, together, for the first time in human history- Pray for a market failure.