Religion & Communication

Investigating the Impact of Religion on Government Size

Document Type : Scientific-Research Article

Author

Assistant Professor, Department of Economics, Naragh Branch, Islamic Azad University, Naragh, Iran

Abstract

The purpose of this study is to investigate the effect of the role of religion in determining the size of government. For this purpose, a simple economic-political model was considered following the study of Azzi and Ehrenberg (1975) based on the study of Meltzer-Richard, and religiosity was modeled as the intensity of satisfaction from charitable donations for public goods, in which the more religious people are, the more satisfaction they get from voluntary donations. Religious people vote for lower levels of taxation than secular people in order to spend a larger portion of their income on voluntary  contributions. Thus, the political process leads to a reduction in the size of government in more religious countries, meaning lower levels of spending on public goods and redistribution. The "belief in life after death" index was considered a religious criterion, and for the size of the government, the tax burden indices and the ratio of government expenditures and transfer payments to GDP were considered. Data were collected for a period of 15 years (2018-2004) from the Statistics Center and the Central Bank of Iran and GMM and 2ls IV econometric models were used to analyze the data. The results showed: a) Countries with a higher level of belief in life after death (more religious) tend to have a higher level of tax burden, so the size of government is reduced. b) The variable of belief in life after death as a measure of religiosity has a negative and significant effect on the ratio of government spending to GDP as a measure of government size. Therefore, more religious countries will have a lower ratio of government spending to GDP, which would mean a reduction in government size. c) Countries with a higher level of belief in the afterlife (religion) have a lower level of transfer payments, which would mean a smaller size of government. Finally, it can be stated that more religious countries have lower levels of taxes and government spending. On the contrary, it is expected the size of government in smaller religious countries to be smaller. Therefore, religion and the cost of government welfare are considered as alternative mechanisms for providing social insurance.

Keywords

Main Subjects

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Religion & Communication
Volume 28, Issue 2 - Serial Number 2
religion and communication
March 2022
Pages 458-435