Religions and Money

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Here's an interesting piece from the NY Times that says your religion may determine your financial destiny. A summary:

The most affluent of the major religions — including secularism — is Reform Judaism. Sixty-seven percent of Reform Jewish households made more than $75,000 a year at the time the Pew Forum on Religion and Public Life collected the data, compared with only 31 percent of the population as a whole. Hindus were second, at 65 percent, and Conservative Jews were third, at 57 percent.

On the other end are Pentecostals, Jehovah’s Witnesses and Baptists. In each case, 20 percent or fewer of followers made at least $75,000. Remarkably, the share of Baptist households making $40,000 or less is roughly the same as the share of Reform Jews making $100,000 or more. Overall, Protestants, who together are the country’s largest religious group, are poorer than average and poorer than Catholics. That stands in contrast to the long history, made famous by Max Weber, of Protestant nations generally being richer than Catholic nations.

Many factors are behind the discrepancies among religions, but one stands out. The relationship between education and income is so strong that you can almost draw a line through the points on this graph. Social science rarely produces results this clean.

A few thoughts:

• I think we all know that what makes someone wealthy isn't what you make (income), it's what you keep (that grows your net worth.) And yet we have another piece touting affluence that relies on income measures. Ugh.


• I'm not surprised to see Jews as high earners. We've discussed here before that they, as a group on average, are better educated and thus often make more money.


• I was surprised to see Protestants at the bottom. Wasn't part of the "Protestant work ethic" supposed to be wealth? Then again, maybe they are wealthier (in net worth), but they just earn less. This piece doesn't tell us.


• I think we all know there's a relationship between education and income and, for the most part, the more education you get, the higher your income. That said, the piece doesn't factor in the debt associated with higher education, so again it's hard to see the clear results.

Any thoughts on this that I missed?

Comments

[mdb]

Correlation is not causation. Jews are more likely to live in a city; MA, RI, CT and New York City all have a higher number of Catholics than the rest of the country, all of those places would be higher income areas, though not necessarily higher disposable income areas. In both instances the location would higher income than a southern Baptist or protestant. Since religions tend to cluster, I think what they saw were merely regional differences.

[Matt]

Educated people may keep a closer eye on eductaion of there offspring. The amount of hebrew a jews child needs to learn for their bar or bat mitzvha in order to read the tora is alot and also very important. A college educted person who is concerned about there childs education will keep tabs on there childs learning process closer than a person who did not go to college. A personal observation when asking some parents in my sons class. There are some really smart kids whos parents did not go to college.

Some of this is cultural (jewish) while another has no correlation to a religion. Some of it may have to deal with beliefs in the religion of working hard but there is also the amount of charity that one gives.

Seems to have some correlation to some things within the religion but on the surface the findings are vague.

[Jackson]

I am not completely convinced that religion is a factor. I do believe education, the environment in which the person grows up in, and opportunties available to a person play a larger part.

[BD]

I'm not at all surprised to see Protestants at the bottom. That goes perfectly in line with what I've seen in my life. Myself, and many of my friends are born-again Christian believers (non-denominational, which falls under Protestant). We all have strong work ethic, love God, and are all dirt-poor. Yet, we still give to charity, which tends to slow your net-worth growth.

It seems that Godly Christians are often times poor. Maybe it's because they give more than a non-Christian does. Maybe it's because God doesn't want them to be wealthy. Maybe it's because they tend to have jobs that are NOT in the well-paying 'sciences', and usually are in things such as social work, humanities and arts (like music), which tend to NOT pay well.

[LotharBot]

> The relationship between education and income is so strong that you can almost draw a line through the points on this graph.

This is the key line in the article. Everything else is fluff.

I recently saw a study about religion vs "religious knowledge", which was questions like "what religion was Mother Teresa?" and "which of the following religions are monotheistic?" and other stuff I would consider religious trivia. Not surprisingly, they found that people with higher education got more correct. Since Jews, Atheists, and Mormons had the highest education, they had the highest scores -- which of course led to the misleading headline "Jews, Atheists, and Mormons have most religious knowledge."

In both cases, the headline ignored the real conclusion of the study (that education corresponds to income/test score), instead going for the more provocative headline about religion, even though it turns out to be very misleading.

[TeacHer]

I only read your clips in this blog post from the actual article, but if they were focused just on the U.S., another HUGE factor is geography. Catholics and Jews tend to be concentrated in the Northeastern portion of the U.S. where incomes (and cost of living) tend to be high, whereas Baptists are concentrated in the South where the opposite is true.

[TeacHer]

Annnnddd I just realized another commenter already made my point. I really need to stop skimming and start READING :/

[Mike Hunt]

Ethnicity is correlated with income and religion correlates with ethnicity. Most Hindus come from Indian ethnicity. Most Indians are Hindu, Muslim or Christian. But other groups make up the latter two religions are certainly from non-Indian ethnic groups (Blacks and Caucasians).

I don't know enough about the Reform Jewish to make an intelligent comment.

So the connection between religion and income is not a primary correlation and is tenuous at best.

-Mike

[MBTN]

I wonder how many people are going to read this article and say to themselves "hey, maybe I should convert to Judaism since that seems to be the path to riches!".

[KH]

I've definitely noticed a "cultural" if not strictly religious difference with Jewish people.

In contrast to how I was raised (fundamentalist), my Jewish friends are comfortable discussing money in real (not religious)terms. I was raised (lower middle class to poor) with the vague ideas that "nice people don't talk about money" and "nice people wouldn't make a big deal about the interest rate/cost of something" and "money is the root of all evil, it's more Godly not to care and to be poor", "God will provide so we shouldn't think about it" and so on.

Unfortunately, it's not a great cultural background for making sound financial decisions!

About 10 years ago I became close friends with two Jewish couples and I was constantly surprised at how openly and frequently and casually they discussed financial things that I was not accustomed to sharing, like their mortgage (whether to refinance, or move, or not, with details about down payment amount and interest rate), which car to buy, synagogue fees (which are substantial and non-optional), their salaries, and retirement savings and college plans for their yound kids. They were also much more involved that I expected in their families' finances--borrowing and lending money (for down payments for example) to their father, brothers etc.

At first it shocked me, but then I realized how sensible it all was--and it was clear that they had gained a much better financial education than I had simply by growing up in a family/culture where such things are discussed and shared.

I also know that Hindus (from India anyway) frequently regard their extended families out to cousins as we do their close family--and this extends to money also. One of my co-workers mentioned that he was expected by his family to come up with $10,000 to contribute to his cousin's wedding back in India, and apparently this is a common practice. He was grumbling about it but you could see how this would really help out young couples financially, to share in the wealth of the larger extended family.

So I do think there is probably some religious/cultural component contributing to the statistics.

[Catherine]

I think my parent's religion has had a greater influence than my own on any success that I have.

To be sure, they are the same, we are all Catholic. But it was my parents (and their parents before them, and so on and so on) who sent us to Catholic School. My great grandfather and his sister were both doctors and religious converts. My grandmother graduated college in 1922. I just accompanied my mother to her 60th college reunion (at which there were women in attendance from the classes of 1946 and 1941). They were part of a subculture that went to college. They attended Colleges founded by religous orders for the express purposes of educating Catholics. When generation after generation have pursued higher learning, the option to be mediocre or lazy simply doesn't exist. Even among my siblings and extended family who have opted not to go to college -- each excells at his or her vocation. Not all are in the $75K and up income range, but the average is respectable.

I see parallels in families of Jewish friends and Asian friends. I could convert to another faith or have none at all, but I can't shake the impact of generations of my family targeting a certain goal (higher education). I am keenly aware that they targeted that goal for religious reasons. Wasting God's gifts by engaging in idleness or not doing one's best was seen as sinful in my family.

[mysticaltyger]

I think KH nailed it about the family/culture being open about discussing money making a big difference. I suspect Jews would probably be among those with highest net worths as well.

On other interesting point is that Jews tend to have a low divorce rate. This helps in 2 ways. 1. We know people who get married and stay married are more likely to become wealthy. 2. We also know that people divorce over money. If you come from a culture where people talk about money, you are much more likely to be on the same page with your potential spouse, and thus, much less likely to have conflicts over money that lead to divorce.