Religious polarization, religious conflicts and individual financial satisfaction: Evidence from India

• DOI: http://doi.org/10.1111/rode.12567
• Author: Matteo Migheli
• Published date: 01 May 2019
• Date: 01 May 2019

REGULAR ARTICLE

Religious polarization, religious conflicts

and individual financial satisfaction:

Evidence from India

Matteo Migheli*

University Torino, Torino, Italy

Correspondence

Matteo Migheli, University Torino,

Department of Economics and Statistics

“Cognetti de Martiis”Lungodora Siena,

100, 10153 Torino (TO), Italy.

Email: matteo.migheli@unito.it

Abstract

The extant literature finds religion to be a major determi-

nant of life satisfaction. However, in contexts character-

ized by religious tensions, the outcome may be very

different. In particular, the literature shows that religious

polarization has a major influence on some economic out-

comes. The analysis presented in the paper tries to iden-

tify the impact of religious polarization on a major

component of life satisfaction: financial satisfaction. The

paper inquires how belonging to a minority religion and

living in areas with different levels of religious polariza-

tion affect the individual satisfaction with the financial

situation of the household. The results show that the

members of minority religious groups are less satisfied

than the members of the dominant group, and that the

financial satisfaction decreases—for a given income—as

the religious polarization increases.

KEYWORDS

discriminated religious minorities, financial satisfaction, religious

polarisation

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INTRODUCTION

In the modern view of economic development, individual life satisfaction (LS) plays a major

role. Indeed, one of the main goals of the economics of development is to allow people to

live a full and satisfying life (Oswald, 1997). The extant literature indicates that LS is a com-

posite concept. In particular, several conditions, comprising individual health, financial situation,

*Also affiliated to CeRP-Collegio Carlo Alberto, Torino, Italy.

DOI: 10.1111/rode.12567

Rev Dev Econ. 2019;23:803–829. wileyonlinelibrary.com/journal/rode © 2018 John Wiley & Sons Ltd

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marital status, employment status, working conditions, and more in general the context where a

person lives influence it (Appleton & Song, 2008; Clark, Diener, Georgellis, & Lucas, 2008;

Kassenboehmer, & Haisken‐DeNew, 2009; Pavot & Diener, 1993). In particular, the satisfaction

with the financial conditions of the household plays a relevant role (Brown, Durand, Harris, &

Weterings, 2014; Diener & Diener, 2009), and is important from an economic point of view,

beacuse it allows for identifying correlates between religious polarization and financial satisfac-

tion (FS).

In most of the countries studied with respect to LS, religions are found to be positive sources

of well‐being, as they engender hope and provide relief from (psychological) distress. However,

there are countries, where religions are also the cause of conflicts between the members of differ-

ent creeds. There, both conflicts and being member of some religious group may affect negatively

many socioeconomic outcomes both at the micro and macro level. Montalvo and Reynal‐Querol

(2003, 2005a) investigated the impact of ethnic and religious polarization on economic develop-

ment, finding a negative relationship between ethnic polarization and economic development. The

present paper uses their polarization index to inquire about the effect of religious polarization on

FS, which is a major component of LS. Indeed, the literature on LS and religiosity shows that reli-

gious polarization and LS are negatively linked (see Section 2).

The empirical analyses presented here addresses the relationship between membership of a reli-

gious minority and religious polarization on the one side and satisfaction with the household finan-

cial situation on the other side in an environment, where religion‐based conflicts are present. A deep

understanding of what actually affects the individual FS can be very useful for economists, as,

according to some literature, the reported subjective satisfaction with the financial condition of the

household can be interpreted as a proxy measure for the utility generated by money (Clark, Etilé,

Postel‐Vinay, Senik, & Van der Straeten, 2005; Layard, Mayraz, & Nickell, 2008; Stutzer, 2004).

This paper contributes to the extant literature on financial satisfaction in at least two ways. The

first is by inquiring about the effects of religious polarization on financial satisfaction, an issue not

yet addressed by the extant literature. The second contribution is to shed some more light on a

country such as India, whose importance in both economic and political terms is increasing over

time.

On the one hand, one might claim that religious matters do not concern the financial

sphere, and therefore one should expect no effect of the former on the latter. On the other

hand, money may have less psychological value in environments characterized by religious

conflicts that may hinder the individual freedom and health. The analysis presented in this

paper aims at answering this question, that is, whether religious polarization has the power of

affecting the satisfaction that people receive from money. Religious polarization is often associ-

ated with violence and social tensions (see Section 2). The data on religious polarization and

terrorist attacks of religious origin in India

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show a positive correlation coefficient equal to

0.37 with a high level of significance (pvalue < 1×10

–4

). Also the severity of these attacks

increases with religious polarization, with a higher number of casualties in the states that are

more religiously polarized.

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The analysis will show that for a given level of household income

people who live in areas characterized by high religious polarization are less satisfied of the

financial situation of their household than people living in areas that are more homogeneous

from the religious point of view.

The analysis of Indian data shows that people who belong to some minority religions are less

satisfied with their financial situation than people belonging to majority groups and that the FS

decreases as the areal religious polarization increases.

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MIGHELI