The Political Economy of Religion , Individual Liberties , and Redistribution

In this paper we study the role of religiosity in political choices such as redistribution and individual liberties. To a standard model with consumption and effort, we add a third good: civil liberties with a cap established by law. More liberties, like divorce, abortion, gender parity, or gay marriage, may be considered good by the secular and detrimental by the religious individuals. With standard assumptions on individual preferences, this implies that labor supply and income are lower for religious individuals in the presence of liberties. As a result there is a higher share of religious agents among the poor, consistent with evidence that the poor care more about ”moral values”. Still, we show that poor religious agents may prefer low taxes: such individuals also prefer that society restricts liberties, which suppresses income inequality in society and thus induces preferences for low taxes. We also show that restriction of liberties can arise as an equilibrium outcome of a simple political process when society is sufficiently religious. Moreover, if economic polarisation is lower than religious polarisation, such restriction of liberties results in lower taxation. JEL-Classification: Key-words: Religiosity, Redistribution, Individual Liberties, Political Economy. 1This paper results from the reorganisation of our previous work “Liberty, Equality, Religiosity” into two papers: Esteban, Levy and Mayoral (2015) and this one. For comments we thank Peter Buissart. Joan Esteban and Laura Mayoral gratefully acknowledge financial support from the AXA Research Fund, the Generalitat de Catalunya, and the CICYT (ECO2011-25293). We have benefitted from highly competent research assistance by Astrid Sneyers. 2Esteban: Institut d’Anàlisi Económica, CSIC, and Barcelona GSE; [email protected]. Levy : London School of Economics; [email protected]. Mayoral: Institut d’Anàlisi Económica, CSIC and Barcelona GSE; [email protected].