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April 21 Seminar: Daniel Chen

There are two papers to read for this seminar. One is background and the most recent is his current project.

Islamic Resurgence and Social Violence During the Indonesian Financial Crisis

Daniel L. Chen, February 2005


Whether social violence rises or falls with religious intensity is a subject of much debate. This paper exploits differences in religious intensity across Indonesia before and during the Indonesian financial crisis and relative price shocks induced by the crisis to identify the effect of economic distress on the relationship between religious intensity and social violence. Religious intensity before the crisis and social violence after the crisis are strongly associated. Stronger measures of religious intensity are more strongly associated with social violence. Social violence is negatively associated with other social activities. These results are unlikely to be driven by omitted environmental variables: social violence increases fastest where participation in Koran study also increases the fastest, and this is not true for state or industrial violence. Religious intensity is more strongly linked with social violence in regions that are more economically distressed. In other words, economic distress appears to have a causal impact on the link between religious intensity and social violence. Credit availability mitigates this e¤ect. I explain these findings in a model where high marginal utilities during economic distress increase incentives for group conflict where group conflict increases the budget of insurance groups. With volatility, religions with stronger sanctions or violence are more stable and successful. As volatility declines, benign groups and religions become relatively successful.

The Political Economy of Beliefs: Why Fiscal and Social Conservatives/Liberals Come Hand-in-Hand

Daniel L. Chen and Jo T. Lind, April 2005


Religious intensity as social insurance may explain why fiscal and social conservatives and fiscal and social liberals come hand-in-hand. Some argue that depending on the welfare state is the same as worshipping the government as if it were God. No obvious theory explains why political alliances align along this diagonal. The religious right may be against welfare because it competes against its constituents. This theory predicts religious groups with greater within-group charitable giving to be more against the welfare state. Fiscal conservatives-social liberals (libertarians) would be more abundant than social conservatives-fiscal liberals (religious left). However, were the government to be fundamentalist or church-state separation not exist, the alliance would reverse: social conservatives would be fiscal liberals. Data from within the US and across the world corroborate these hypotheses. The theory provides a novel explanation for religious history: as credit markets develop, elites gain access to alternative social insurance and legislate increasing church-state separation to create a constituency for lower taxes. This holds if religious voters exceed non-religious voters. Otherwise, elites prefer less church-state separation in order to curb the secular left. We use this framework to explain the changing nature of religious movements, from Social Gospel to the religious right, and why church-state separation arose in  the US but not in many European countries. Fundamentalism can persist because optimal insurance may be a substantial fraction of pre-unemployment wages. The increase in income volatility from 1972 to 1998 is consistent with the contemporaneous rise in religious intensity in US popular and public discourse.

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