Charles M. North

Religious Freedom and the Unintended Consequences of State Religion

We use a cross-section of 59 countries to examine the impact of state religion and of constitutional protection of religion on the degree of religiosity within a country. Our measure of religiosity is the percentage of the population who attend religious services at least once a week. We find that both establishment of a state religion and constitutional protection of religion have significant (and opposing) effects. The existence of a state religion reduces attendance by 14.6–16.7% of the total population, whereas each decade of constitutional protection increases attendance by approximately 1.2% of the population. We also find that other measures of religious regulation have significant negative effects on attendance. Ironically, the motive behind establishment of a particular state religion usually is to strengthen that religion, but the effects are ultimately to undermine the vitality of the established religion.

Religion, Corruption, and the Rule of Law

Existing research has found that economic growth is higher in countries where (1) certain religious beliefs are stronger and (2) the rule of law is stronger and corruption is lower. This paper examines whether religion is correlated with the rule of law and the level of corruption, thereby providing a partial explanation of the correlation between religion and economic growth. We find that the strength of the rule of law and the level of corruption are both associated with a country’s religious heritage, as measured by the country’s largest religious group in 1900. In addition, we find that our results sometimes differ when we control for variables where we lack data for all countries in the sample, but that these differences are attributable to changes in sample composition rather than inclusion of the control variables. Our results suggest that researchers should take great care to distinguish between the effects of adding a control variable and the resulting sample composition effects when doing cross-country analysis.

Religion and the Emergence of the Rule of Law

From our comfortable and relatively wealthy perches in the 21st Century, many of us in developed nations ask why so many nations are poor? Surrounded by wealth, we wonder how widespread extreme poverty can persist in so many places. We view the poor countries as the exceptional cases, and our own wealthier countries as the norm. But this perspective is rooted in our own circumstances and ignores the grand sweep of history. In the many millennia since homo sapiens first emerged, humankind’s basic conditions have been characterized by subsistence-level living with short average life-spans. Only in the last few centuries has humanity begun to experience the widespread accumulation of wealth typical in a modern developed economy, and with this economic prosperity has come improvement in quality of life in many measurable ways. So, the interesting question to ask is not why are some countries poor?, because poverty has been the norm for humanity for most of its existence. The interesting question is why did any country ever get rich? Economists and economic historians have proposed a multifaceted array of answers to this question. Any valid answer to why did any country get rich? must at least begin with the nations of Western Europe, because that is where the modern wealth-generating economy first got its start. In this chapter, we examine the role played by the Medieval Roman Catholic Church in creating the institutions that generated the rule of law in Western Europe, planting the seeds that led to modern economic growth. We consider “rule of law” to mean that a body of rules exists that is defined and enforced well enough to constrain arbitrary governmental actions, and that government itself has well-defined and enforced civil and criminal rules to govern social interactions. The chapter (which is a preliminary sketch of a long-term research project) begins by observing that the Roman Catholic Church was one of the primary producers of wealth in the medieval period (from 1000 to 1500 CE). The Church’s wealth flowed in substantial part from monastic estates, whose heightened productivity likely resulted from cooperative behavior encouraged by the shared beliefs and social norms within the monastery. In the tenth century CE, secular authorities appropriated a large amount of monastic land and other Church properties. For this and other reasons, the Church embarked on a reform campaign in the latter part of the 11th century that asserted the power of the Pope over both the Church and the secular rulers. The papal reform of the 11th century led to the emergence of ecclesiastical courts as the creators and interpreters of the Church’s own canon law, and ecclesiastical courts were able to protect the Church and its holdings from appropriation by political rulers. Many canon law doctrines that shielded the Church from an arbitrary state ultimately made their way into modern Western law, providing protection of property and contract rights to individuals vis-à-vis the state in ways still felt today. In contrast to Western Europe, the religious authorities in other parts of the world lacked the power and authority of the Medieval Church relative to secular rulers, so that the

Rainfall or Rainmaking? Lawyers, Courts, and the Price of Mold Insurance in Texas

In well-functioning property-liability insurance markets, the price of coverage reflects the impact of the legal environment on the frequency and severity of claims. This paper presents a case study of the Texas mold insurance crisis of 2001-02. We provide a narrative of the controversy in Texas over insurance coverage for household mold and use county-level data from a single Texas insurer to assess the determinants of post-crisis prices for supplemental mold, slab, and extended water loss coverages. We find that more attorneys per capita and more heavily Democratic courts were both associated with higher prices for mold and slab coverage.

Remedies for misrepresentation in applications in the presence of fraudulent intent

Many contracts are based upon information provided in written applications, including insurance and employment contracts. However, the remedies used in these two contexts for material misrepresentation in the application differ. Insurers use the remedy of rescission and restitution, which returns the parties to status quo ante. Employers simply terminate the contract, leaving the parties where they are at the time of termination. This paper examines the role played by each remedy in the context of intentional misrepresentation. It is shown that rescission and restitution expands the situations in which mutually beneficial contracting will occur. It is also shown that insurers can offer lower premiums when the remedy of rescission and restitution is available.