Religiosity and economic performance: Microeconometric evidence from rural Tibet

We use results from a household survey to explore the relation between religiosity and our proxy for income among herders in rural Tibet. Our main results are twofold. First, there exists a positive relation between the intensity of religious beliefs (the main ‘output’ of the religious production process) and income — beliefs about the afterlife affect production and savings decisions today. Second, and perhaps more surprising, we find an inverted U-shaped relation between religious ‘inputs’ (time and money spent in the temple) and income. While it is possible to use too much resources as religious inputs, we find that the great majority of the respondents is on the upward sloping part of the curve linking economic performance to religious inputs. We present tentative evidence that the positive impact of religiosity and income may be explained by status (reputation) and information effects associated with producing religiosity.