Empirical research on the determinants of economic growth has typically neglected the influence of religion. To fill this gap, we use international survey data on religiosity for a broad panel of countries to investigate the effects of church attendance and religious beliefs on economic growth. To isolate the direction of causation from religiosity to economic performance, we use instrumental variables suggested by our analysis of systems in which church attendance and beliefs are the dependent variables. The instruments are dummy variables for the presence of state religion and for regulation of the religion market, an indicator of religious pluralism, and the composition of religions. We find that economic growth responds positively to the extent of religious beliefs, notably those in hell and heaven, but negatively to church attendance. That is, growth depends on the extent of believing relative to belonging. These results accord with a perspective in which religious beliefs influence individual traits that enhance economic performance. The beliefs are, in turn, the principal output of the religion sector, and church attendance measures the inputs to this sector. Hence, for given beliefs, more church attendance signifies more resources used up by the religion sector.

Two important theories of religiosity are the secularization hypothesis and the religion market model. According to the former theory, economic development reduces religious participation and beliefs. According to the latter theory, religiosity depends on the presence of a state religion, regulation of the religion market, suppression of organized religion under Communism, and the degree of religious pluralism. We assess the theories by using survey information for 61 countries over the last 20 years on church attendance and religious beliefs. In accordance with the secularization view, overall economic development—represented by per capita GDP—tends to reduce religiosity. Moreover, instrumental estimates suggest that this link reflects causation from economic development to religiosity, rather than the reverse. The presence of an official state religion tends to increase religiosity, probably because of the subsidies that flow to organized religion. However, in accordance with the religion-market model, religiosity falls with government regulation of the religion market, Communist suppression, and a reduction in religious pluralism. Although religiosity declines overall with economic development, the nature of the interaction varies with the dimension of development. For example, religiosity is positively related to education and the presence of children and negatively related to urbanization.