Abstract:
This paper examines how religious ethic influences contributions to public goods. We develop a theoretical model distinguishing individualistic motivations - where people seek to meet individual moral standards - from collectivistic motivations - where behavior is guided by others' expectations. We argue that the Protestant ethic emphasizes individual responsibility, while the Catholic ethic places greater weight on social expectations. The model predicts that the Protestant contribution share increases with income, whereas the Catholic contribution share is non-monotonic. Moreover, Catholics' overall contribution is relatively higher at lower-middle incomes and lower at higher-middle incomes, while there is no denominational difference in the decision whether to contribute at all. The model also implies that only Catholics' contributions are sensitive to the religious composition of their environment. We test these predictions using data from the German Socio-Economic Panel, exploiting variation within individuals. Consistent with the theoretical model, we find (i) no denominational differences at the extensive margin; (ii) at the intensive margin, donations increase with income among Protestants and remain flat among Catholics. These results hold when using the denomination of the parents, suggesting intergenerational transmission of religious ethics. Our findings highlight the role of religious moral structures in shaping cooperative behavior and public-good provision.
