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AbstractUsing an international dataset of about 35,000 subjects, this paper provides an empirical example of high-stakes incentives in relation to religious practice. First, we show that incentives (based on absolute belief) play a salient role in religious performance. Second, we find that, when both positive (heaven) and negative (hell) incentives are available, the former are more effective than the latter. Specifically, it is shown that beliefs in heaven are much more relevant than beliefs in hell when estimating the production of religious commodities (church-attendance and praying equations).Keywords: carrot/stick, high-stakes incentives, rewards, punishment, Economics of Religion JEL Classification: C91, D64, Z13 1 Very helpful comments by the Editor and two anonymous referees are much appreciated. Pablo Brañas-Garza and Teresa García-Muñoz acknowledge financial support from MCI (SEJ2007-62081/ECON) and Junta de Andalucia Excelencia (P07.SEJ.02547). Part of this study was completed at the time Shoshana Neuman was staying at IZA (summer 2007 and 2008). She would like to thank IZA for their hospitality and excellent research facilities. In particular, thanks are due to Margard Ody, the IZA information manager, for providing the numerous publications read for the paper's literature review. Pascal's argument (extracted from "Pensées").
MotivationRecently, three salient topics have increased interest in the role of incentives in economic decisions: the loss aversion theory (e.g. Tversky & Kahneman, 1991); the effectiveness of punishment (vs. rewards) in experimental settings (Andreoni, Harbaugh & Vesterlund, 2003;Nikiforakis, 2008); and how results may vary when incentives are substantially larger -high-stakes incentives (Slonim & Roth, 1998).Following Azzi and Ehrenberg (1975) it is assumed that subjects invest in religious activities (church attendance and prayer) as necessary conditions for reaching heaven and avoiding hell. Heaven and hell therefore serve as incentives for religious behaviour. An interesting question that follows is whether religious activity of individuals is indeed affected by the degree of their belief in after-life. Moreover, is religious behaviour affected differently by belief in heaven (that relates to a gain/reward) and in hell (that expresses a loss/punishment)?This paper provides an empirical example of the effect of high-stakes incentives on religious practice, using about 35,00...