Religious and secular human

capital : an economic model

Gideon Hollander, Nava Kahana, Tikva Lecker, (2003).
Religious and secular human capital : an economic model.
Journal of Socio-Economics 32, 489-498.

MICROECONOMICS ECON 7110

Motivation of the
paper
Why it is important?
In western tradition of modern

knowledge, religion is viewed as a

category of irrational behavior.
This paper attempts to improve the
adverse. It incorporates religion in
theories of rationality.
Religious and secular human capital are

complementary inputs in generating

income
Religious studies have direct effect on

Motivation of the
paper
Why it is published in high ranked journal?
Journal of Socio-economics
2-year Impact factor 0.74
3-year Impact factor 0.9
H-Index 24

This paper addresses a real life

phenomenon where it has been ignored

by economists, to explain the choices of
religious people and its consequences to
their utility.

Motivation of the
paper
Techniques used?
Extension of existing model on human

capital investment and theory of

allocation of time (Becker, 1965) :
adds new variable into the model
Individual

divides his/her total available

time, T, between three activities:
o Secular studies, tG
o Religious studies, tR
o Work

The Model
Allocation-of-time Model
This was
originally
taken as
training
time

Individuals ability to generate income depends on

time allocated for work and trainings/studies.

Empirical studies showed that there is relationship
between earning and religion.
Therefore, this study incorporates time devoted for
religious study into the model

Assumption:
Ability to generate income depends

positively on both time devoted to secular

studies and time devoted to religious studies
Individual cannot predict the future, so he or
she is assumed to have single-value
expectations for all future variables

The present
value of the
individuals
lifetime net
income at the
start of his/her
studies

The
present
value of
future
earnings

The present
value of
wages earned
during the
study period

Religious studies has direct effect on utility. Utility

function:

: Aggregate religious studies in the

economy, as given.
Assumption:

is quasi-concave,

For religious
individuals
For non-religious
individuals

This study focuses on religious individuals

Objective function:

First order conditions define the optimal choice of

and

(1)

and

(2)

Two steps optimization:

Select all of the efficient combinations of

and

that

satisfy (1)
Select the optimal pair
that maximize utility for
which the tangency condition (2) holds.

Summary
Religious behavior is consistent with rational economic

approach.
Religious and secular human capital are complementary inputs

in generating income
Religious studies have a direct effect on utility
Religious studies involve positive externalities
Extension of human capital investment model assuming

that an individual may be engaged in both religious and

secular studies.
Direct effect of religious studies on utility motivates the

individual to invest more in religious as well as secular studies

Effect of wage change wage increase may increase time spent
on religious studies (normal good), as well as on secular studies,
due to direct effect of religious studies on utility

Thank you