Wall Street Journal Op-Ed: The Economics of Religion, by Roland Fryer (Harvard):

Religion is one of the most successful enterprises in human history. Churches [in] the U.S. alone collect well over $100 billion a year in donations. Billions of people globally are adherents to a religion. The institutions are durable. The customers are loyal. And the product—moral structure, meaning, answers to life’s hardest questions—serves an essentially universal demand. …

Market structure is one of several features of religion that resist easy explanation. Why does religion persist despite asking so much—time, money, behavioral constraint, belief in claims that resist verification? Why does the market fragment rather than consolidate? And what exactly does religion produce? The answers have something to say about American society. …

In the church I grew up in, people didn’t only show up for doctrine. They showed up with needs. A man might ask for help with his electricity bill. A woman would ask for wisdom in dealing with a prodigal son. The church provided more than belief. It provided mutual insurance: a network of people who, in moments of need, would show up for one another.

Such systems have a familiar problem: free-riding. If the benefits of membership are available at low cost, people have an incentive to take without contributing. Over time, the system breaks down. The mutual aid degrades. The community hollows out. This isn’t unique to religion—it afflicts any organization that produces collective goods. But religion, across traditions and centuries, has converged on a remarkably consistent solution: make participation costly.

This is the central insight of Laurence Iannaccone, whose paper “Sacrifice and Stigma” (1992) reframed how social scientists think about religious behavior. The demands religion places on its members aren’t barriers to participation. They are the mechanism by which participation becomes valuable.

Muslims fast during Ramadan. Observant Jews set aside the Sabbath. Latter-day Saints tithe and serve missions. Christians gather, give and organize their lives around shared rituals like Easter. The details differ. The economics don’t.

When participation requires visible sacrifice—time, money, behavioral constraint—commitment becomes observable. And observable commitment solves a deep problem of trust. In a community built on mutual aid, you can’t verify what a stranger believes. You can observe what he sacrifices. The person who shows up every week and gives regularly has demonstrated something about his willingness to contribute. That demonstration is the glue that holds the community together.

Mr. Iannaccone formalized this as a club-good problem. Religious communities produce things—solidarity, insurance, belonging—that are valuable only if members contribute. High costs screen out free-riders and raise the quality of the group. The community becomes more valuable precisely because entry is hard.

The data are consistent with this. Using survey data from several decades, Mr. Iannaccone documented a striking pattern: The more a tradition demands, the more intensely its members participate. This isn’t causal proof—stricter traditions may attract more committed people—but the pattern is consistent. And there is at least one natural experiment: A 2025 paper showed that when the Catholic Church undertook sweeping reforms after Vatican II—moving Mass from Latin to the local language, softening centuries-old doctrinal positions, loosening practices—attendance fell substantially across Catholic countries, declining about 20 percentage points more than in Protestant countries between 1965 and 2015. Lower cost, weaker community.

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