Love They Neighbor as Thyself: Community Formation and the Church

Abstract: The Church has played a central role in establishing and maintaining, as well as undermining, communities throughout history. We explore mechanisms through which it coordinates individual behaviors to achieve improvements in welfare, and reveal ways in which it can fail, causing communities to founder. In our model, inherently religious individuals may become trapped in a secular equilibrium that is strictly dominated by a religious equilibrium. The Church, via its teaching, clergy, and ministries, reveals the benefits, both in this world and in the world to come, of coordinated behavior and the costs of uncoordinated behavior in order to induce community members to take individually and socially beneficial actions. External forces (the state and secular society) and internal forces (doctrinal disputes, inconsistencies, and incoherence) reduce a Church’s ability to coordinate. Empirical analysis shows that the model’s core features and findings are largely consistent with recent U.S. data on Church attendance and tithing. 
JEL: Z12, I19, H42
Keywords: Economics of Religion, Spirituality, Community Formation, Coordination Failures