August 09, 2005

Church: The Ultimate Safety Net

Why do people join and participate in church? Okay, lots of reasons, obviously, but one reason, perhaps, is that churches can provide a very powerful safety net, according to this interesting paper by Dehejia, DeLeire and Luttmer. Joining a church can, in theory, help a person maintain his or her happiness and/or consumption during times of income instability—happiness because, perhaps, the person builds up all that social capital through the church and, of course, finds solace in god during rough times. Consumption because other members of the church can pitch in and help when, say, a member loses a job. As it turns out, this really does seem to happen. White households who contribute to a religious organization were able to insure about 30 percent of their consumption against income shocks (this effect wasn't statistically significant for blacks). For black households, meanwhile, attendance at church could offset about three-fourths of happiness loss from income shocks, although this effect was, again, statistically insignificant for whites (which doesn't mean it doesn't exist.)

Why the racial disparity? One theory has it that for African-Americans, church is the only community out there—so blacks who don't join a religious organization have fewer ties to the community and less social capital. Hence, church is that much more important for insuring one's happiness during hard times. Whites, meanwhile, may have more social networks available to them outside of church. Alternatively, looking at consumption insurance, white churchgoers are more likely to help each other out during income shocks with cash—which would show up on the data—whereas black churchgoers with favors and other in-kind services. (One might also think that the loans, etc., given out in predominantly white churches during hard times could make the recipients feel guilty, and hence help explain why white churchgoers seem to get less of a happiness effect. Really, these are just theories being tossed about.)

At any rate, it's also pretty easy to see why so many chuchgoers—especially white churchgoers—oppose the welfare state, and are unlikely to be swayed by, say, Jacob Hacker's argument that government-provided social services can insure against income shocks. Churchgoers already have insurance against risk, and it works extremely well, perhaps better than the government could do. Why does it work so well? Partly because there are so few free-riders—as I've discussed before, Laurence Iannaccone has suggested that some churches employ strict rules, religious observations, etc., in order to keep "unserious" members of the church out. Of course, that also means that the church, by its selective nature, is a poor and imperfect substitute for the welfare state. Still, try telling that to churchgoers.
-- Brad Plumer 2:09 PM || ||