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ANTHOLOGY A Note on Religion and Relative Prices ROGER W. HUTCHINSON U.S. Department of Commerce* In an article appearing in the March 1977 Atlantic Economic Journal ["Religion and Rela- tive Prices," Atlantic Economic Journal, V, 1, March 1977, pp. 69-73], Paul Pautler attempts to show that the economic theory which explains how individuals react to changes in relative pric- es between goods can be used to support a causal relationship between church membership and giving. Pautler's analysis and conclusions indi- cate a less than adequate grasp of the subject matter. This note is a mild attempt to redirect thinking in this area and develop a more ade- quate theoretical basis from which future re- search might proceed. The voluntary nature of giving seems to be the cause of Pautler's misunderstanding. While it is true, as Pautler suggests, that all purchases are voluntary in the sense that the buyer is not actually forced to purchase any one product, necessity dictates that, for various reasons, he will have to purchase at least one. For example, a person does not have to purchase potatoes, but, assuming he has made the choice to live, he does have to purchase food, and this necessitates the purchase of at least one food product. The person confronted with voluntarily giving to the church is not forced by necessity to give to at least bne church but has the option of not giving to any church. Because of this option, giving to the church cannot be viewed as a true cost on which to base any decision concerning church membership. One other peculiarity of church giving tends to further undermine Pautler's analysis. Giving to the church is governed by an all or none re- quirement. Ifa church requires a member to give, this requirement will likely specify a tithe of 10 percent of income. On the other hand, if a church does not require giving as a condition for membership, it will likely advise that giving take the form of a tithe of 10 percent of income. The actual decision to give and the amount to give is left to the member. For Pautler's analysis to gain some measure of validity, it would have to be mandatory for a person to give to at least one church while, at the same time, churches would have to be free to compete with each other on the basis of the tithe they would require as a condition for mem- bership. These conditions are not met, suggest- ing that the ultimate failure of Pautler's analysis is to attempt to treat church membership as a private good when the indication is, more appro- priately, that it is a public good. Pautler almost proceeds in this direction as he indicates an awareness that one characteristic shared by most churches is to allow non-paying individuals to attend. For some reason, however, Pautler insists on proceeding as if the individual who attends church is forced to do so, is forced to give, and, therefore, will attend that church where the per- ceived costs are lowest. Such reasoning is not theoretically sound, and Pautler's analysis is a reflection of this. *This paper reflects the views of the author and not Department of Commerce policy. 96

A note on religion and relative prices

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ANTHOLOGY

A Note on Religion and Relative Prices ROGER W. HUTCHINSON

U.S. Department of Commerce*

In an article appearing in the March 1977 Atlantic Economic Journal ["Religion and Rela- tive Prices," Atlantic Economic Journal, V, 1, March 1977, pp. 69-73], Paul Pautler attempts to show that the economic theory which explains how individuals react to changes in relative pric- es between goods can be used to support a causal relationship between church membership and giving. Pautler's analysis and conclusions indi- cate a less than adequate grasp of the subject matter. This note is a mild attempt to redirect thinking in this area and develop a more ade- quate theoretical basis from which future re- search might proceed.

The voluntary nature of giving seems to be the cause of Pautler's misunderstanding. While it is true, as Pautler suggests, that all purchases are voluntary in the sense that the buyer is not actually forced to purchase any one product, necessity dictates that, for various reasons, he will have to purchase at least one. For example, a person does not have to purchase potatoes, but, assuming he has made the choice to live, he does have to purchase food, and this necessitates the purchase of at least one food product. The person confronted with voluntarily giving to the church is not forced by necessity to give to at least bne church but has the option of not giving to any church. Because of this option, giving to the church cannot be viewed as a true cost on which to base any decision concerning church membership.

One other peculiarity of church giving tends

to further undermine Pautler's analysis. Giving to the church is governed by an all or none re- quirement. I fa church requires a member to give, this requirement will likely specify a tithe of 10 percent of income. On the other hand, if a church does not require giving as a condition for membership, it will likely advise that giving take the form of a tithe of 10 percent of income. The actual decision to give and the amount to give is left to the member.

For Pautler's analysis to gain some measure of validity, it would have to be mandatory for a person to give to at least one church while, at the same time, churches would have to be free to compete with each other on the basis of the tithe they would require as a condition for mem- bership. These conditions are not met, suggest- ing that the ultimate failure of Pautler's analysis is to attempt to treat church membership as a private good when the indication is, more appro- priately, that it is a public good. Pautler almost proceeds in this direction as he indicates an awareness that one characteristic shared by most churches is to allow non-paying individuals to attend. For some reason, however, Pautler insists on proceeding as if the individual who attends church is forced to do so, is forced to give, and, therefore, will attend that church where the per- ceived costs are lowest. Such reasoning is not theoretically sound, and Pautler's analysis is a reflection of this.

*This paper reflects the views of the author and not Department of Commerce policy.

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