Religion, Cynicism, And Behavioral Economics

They tell us faith is changing;
There are fewer in the church;
They’re no longer seeking guidance,
Going solo in their search….

So attendance has been hurting—
People say they can’t relate—
And it’s noticeably different
Every time they pass the plate

So the churches weighed their options
And they prayed up to the skies;
Like a bolt of sacred lightning
Came the answer: advertise!

When you want to sell a product
There’s a rule you’ll want to heed;
Take the target demographic
And identify their need!

If you want to fill the churches
And increase your market share
Then you need to send your message
To the people who aren’t there

It’s a pretty standard rule, but
It’s a rule that you can bend—
If your product isn’t needed…
You can always just pretend!

When your product is salvation
There are two competing views…
Because everyone needs Jesus?
Or you need to fill the pews?

Two unrelated stories came together in my reader feed thingy, and made me suspect I just might be cynical.

The first is an NPR story, “U.S. Still Religious, But Trust In Institutions Wanes“. Oddly, it is written by “NPR Staff”, and one of the biggest interviewed experts is… NPR correspondent Barbara Bradley Hagerty. She says (unsurprisingly) that declining church numbers do not mean that America is less religious.

“Although among young people, belief in God is declining,” Hagerty tells weekends on All Things Considered host Guy Raz. “But generally polls show that about 90 percent of Americans actually believe in God. So what’s happening here is a decline in the trust of religious organizations.”

People just don’t want to go to church as much as they used to, Hagerty says, and the societal pressures to go aren’t there anymore.

See, it’s not about religion, it’s about a personal relationship with God. Or with Jesus Christ, as the terrorist pastor says. (I link that just in case anyone thinks that the “personal relationship with Jesus” people are somehow more touchy-feely, wishy-washy, safer than organized religious groups.) Hagerty notes that the nondenominational Christians don’t see the falling numbers that the older denominations have, crediting their numbers in part to “marketing”. (It’s actually an interesting article, but that’s where I’m going to leave it right now. I do recommend reading it.)


The next thing in my reader reported on a fairly cool church bulletin:

It continues (for quite a bit, actually) at “Stuff Christians Like” but you get the gist.

At “Stuff Christians Like”, the interpretation is, well, sweet.

I love the thought that a few members of Our Lady of Lourdes Catholic Community getting together and saying, “Let’s invite everyone to come meet Jesus!” And then they started writing their list.

And it got long. Why?

Because everyone needs Jesus.

Everyone changes when they meet Jesus.

And they wanted to make sure everyone knew they were invited to meet him.

But I am reminded of an old joke, about a person who used to buy eggs from a local farmer. Sometimes the farmer would deliver the eggs to people’s houses, but they were also for sale at the farm. They were $2.00 a dozen delivered, and $3.00 a dozen at the farm (you can determine the approximate year I heard the joke from these prices). This, of course, made no sense to this particular shopper, who inquired with the farmer as to the pricing.

“Well, when you come to my farm, you need eggs; when I come to your house, I need money.”

Supply and demand, in one simple (not that funny) joke. And that’s what the cynic in me (whom I try to keep chained up) sees in this church bulletin. They need butts in pews. They need warm bodies.

I have to admit, I like the other interpretation better. It would be nice to believe. But it’s just not true. It’s like saying everyone needs homeopathy, or craniosacral therapy, or their chakras manipulated. The truth is homeopaths, craniosacral therapists, and chakra manipulators (?) need money.

And selling salvation beats working.


  1. 'Tis Himself says

    “Well, when you come to my farm, you need eggs; when I come to your house, I need money.”

    I stared at this line for over a minute before I finally got the joke. Curse me for being an economist. It’s taken away the ability to enjoy semi-funny jokes.

  2. Cuttlefish says

    You should have gotten it first!

    You do know the one about the $20 bill lying on the ground, don’t you?

  3. says

    Oh Cuttlefish! I don’t think you are a cynic – I think you are a realist.

    I love the poem. As a former practicing Catholic, I like the welcoming interpretation better – and I know there are lots of people in that parish who believe that is the beginning and end of that bulletin – but the parish treasurer and the parish council know that it is about butts in the pew.

  4. 'Tis Himself says

    You should have gotten it first!

    The joke makes a shambles of marketing. The farmer’s expenses increase if he’s delivering eggs, i.e., the fuel, deprecation on his vehicle, his time, etc. So he should be charging more for delivered eggs. The customer wants eggs and the farmer wants money regardless of the location.

    You do know the one about the $20 bill lying on the ground, don’t you?

    Do you really want me to write about the efficient market hypothesis? Even if you don’t I will.

    There’s an old story about an economist and passionate defender of the efficient markets hypothesis (EMH) walking down the street with a friend. The friend says, “Look, there’s a $20 bill on the ground.”

    The economist coolly replies, “Can’t be. If there was a $20 bill on the ground, somebody would have already picked it up.”

    This “joke,” told by those that believe that the markets are inefficient and that investors can thus outperform the market by exploiting mispricings, is actually a very misleading analogy to the EMH. The following is a much better analogy:

    An economist and passionate defender of the EMH was walking down the street with a friend. The friend says, “Look, there’s a $20 bill on the ground.”

    The economist says, “Boy, this must be our lucky day! Better pick that up quick because the market is so efficient it won’t be there for very long. Finding a $20 bill lying around happens so infrequently that it would be foolish to spend our time searching for more of them. Certainly, after assigning a value to the time spent in the effort, an investment in trying to find money lying on the street just waiting to be picked up would be a poor one.”

    When he had finished they both look down and the $20 bill was gone!

    What those who tell the first version of the story fail to understand is an efficient market doesn’t mean that there cannot be a $20 bill lying around. Instead, it’s so unlikely to find one that it doesn’t pay to go looking for them. The cost of the effort are likely to exceed the benefits. Also note that if it became known that there were lots of $20 bills to be found in a certain area, then everyone would be there competing to find them, reducing the likelihood of achieving an appropriate return on investment.

    The analogy to the EMH is that it’s not impossible to uncover an anomaly (that $20 bill lying on the ground) that can be exploited. Instead, one of the fundamental tenets of the EMH is that in a competitive financial environment, successful trading strategies self-destruct because they are self-limiting. When they are discovered they are eliminated by the very act of exploiting the strategy. Lee and Verbrugge explain the power of the EMH:

    The efficient markets theory is practically alone among theories in that it becomes more powerful when people discover serious inconsistencies between it and the real world. If a clear efficient market anomaly is discovered, the behavior (or lack of behavior) that gives rise to it will tend to be eliminated by competition among investors for higher returns. For example, if stock prices are found to follow predictable seasonal patterns this knowledge will elicit responses that have the effect of eliminating the very patterns that they were designed exploit. The implication is striking. The more empirical flaws that are discovered in the efficient markets theory the more robust the theory becomes. Those who do the most to ensure that the efficient market theory remains fundamental to our understanding of financial economics are not its intellectual defenders, but those mounting the most serious empirical assault against it.¹

    In summary, while the markets may not be perfectly efficient (it is possible to find a $20 bill waiting to be picked up), the prudent investment strategy is to behave as if they were. Investors who accept the EMH as fundamental to their investment strategy don’t have to spend their time searching for the very few $20 bills lying on the ground. Instead they earn market returns, less very low costs, based on the amount of risk they are willing to accept.

    ¹Dwight Lee and James Verbrugge, “The Efficient Market Theory Thrives on Criticism,” Journal of Applied Corporate Finance, Spring 1996.

  5. Cuttlefish says

    ‘Tis, I wish I had read your comment two years ago. Seriously. Very seriously.

    Yes, there’s a story there, but I am, after all, a cuttlefish. I thank you more than you know for your comment. Hell, I’d even let you pick up the twenty if we were walking together.

  6. Cuttlefish says

    The customer wants eggs and the farmer wants money regardless of the location.

    Well, no.

    There is a palpable difference between wanting eggs at $2 a dozen and $3 a dozen. I don’t need to eat eggs. I like to eat eggs. If I have guests, and have promised them hollandaise sauce, with no other options, I will drive to the farmer and buy eggs for five bucks an egg. If the farmer comes to me, I can turn down scrambled eggs at $3 a dozen but eat them at $2 a dozen, depending on, say, whether I have recently bought bacon. The differences in worth (you noted fuel, depreciation, time, etc.) are not only on the production side. (And don’t get me started on how economists ignore simple schedules of reinforcement.)

  7. procrastinator will get an avatar real soon now says

    From the sounds of your response to ’tis you might be interested in the Diehards/Bogleheads forum. They’re all about investing on the cheap, i.e. index funds.

  8. OurSally says

    Umm. You seriously missed the point of that joke. The farmer will be driving round delivering at $2 anyway. The thought that they might cost $3 somewhere else stimulates people to buy his eggs (have them delivered) even if they were not planning to.

    That’s like the banana man selling one pound for $4 or two pounds for $10. People come and buy one pound twice and think they got a bargain.

  9. Johnny Vector says

    The joke makes a shambles of marketing.

    Er, you mean “efficient markets”, or something, not “marketing”. There certainly is marketing that works that way. Have you ever bought an airline ticket 3 days before the flight? Why does it cost so much more if not because the people buying tickets at the last minute need a ticket more than a typical customer, and thus are willing to pay more?

    Or maybe a better way to say it is “eggs stat!” is a different product than “eggs”. (Although really airline tickets are a much better example of this than eggs.)

  10. 'Tis Himself says

    Johnny Vector,

    You’re right, I misspoke.


    The differences in worth (you noted fuel, depreciation, time, etc.) are not only on the production side. (And don’t get me started on how economists ignore simple schedules of reinforcement.)

    Get started!

    <waits with breathless anticipation>

  11. Cuttlefish says

    Sally, If I don’t need eggs, I don’t need them at $2. And in the joke, it’s not “have them delivered”, it’s when the farmer decides to go out selling eggs. A subtle but important distinction.

    Who is the source of “an elephant for a nickel is a good deal, but only if you have a nickel and need an elephant”? I can’t seem to find an attribution.

  12. Cuttlefish says

    Long story, ‘Tis. I spoke with an economics prof after he returned from Vegas, a town arguably built on the variable ratio schedule of reinforcement. He was adamant that the amount people spend there is a rational decision based on the amount of enjoyment they receive. Having seen zombie slots players mechanically plug their bank accounts into rows of machines in the wee hours of the morning, I begged to differ, and we had quite the (unresolved) argument.

  13. 'Tis Himself says

    I work at a non-Vegas casino.

    The majority of players come to casinos with a set amount they’re willing to spend (a budget) and when that money is gone they go home. However a noticeable minority will “mechanically plug their bank accounts into rows of machines in the wee hours of the morning.”

    It’s like one type of alcoholic who can’t stop drinking. Most people can have one or two drinks and then leave the bar. But some people will drink until they pass out.

    You and the economist are both right. There are people who gamble or drink until their self-imposed limit is reached and then walk away. There are other compulsive gamblers or drinkers who can’t stop until it’s impossible to go on.

    Incidentally, working at a casino has cured me of any interest I might have in gambling. I know how the house controls the odds so it’s impossible for the players to win over the long run.

  14. Cuttlefish says

    The economist I spoke with is one of those who sets a limit. The way he phrased it, though (and it’s close to the way you do, but I won’t claim you say this), would be consistent with (because of what he leaves out, which I’ll get to in a moment) paying that fee up front, for the privilege of standing in a noisy room pulling a lever for several hours. Clearly even the controlled gambler is controlled… by the unpredictable variable ratio schedule. My economist was leaving out the entire reason he finds enjoyment in gambling–of course he would not be satisfied to pay up front and just enjoy the experience.

    And, working in a casino, I’m sure you are more aware than most that the casinos are experts in the use of reinforcement schedules. For instance (for other readers), with an individually-identifying “rewards card” that lets the casino know where and what you are playing, they can follow your numbers around and eventually know what your self-imposed limit tends to be. They can then know when you are approaching that limit, and while they cannot tweak the odds of a game once you have started playing, they can approach you on the floor and conveniently, just when you were about to leave, present you with your card’s rewards for the day. Even if you leave down 200 bucks, the last thing you remember is the free drink coupon or the show ticket, and they have an eagerly returning customer.

    Sure, the customers spend money there “because they enjoy it”, but they enjoy it because that’s the effect of a variable ratio schedule.

  15. 'Tis Himself says

    Casinos use a variety of reinforcements, especially in a saturated environment like Las Vegas or Atlantic City. The “rewards cards” you refer to are called “comps” (short for “complimentary”) and generally operate on a penny per dollar gambled. Casinos track players very carefully and very rigorously through the comps. Plus pit bosses and other floor supervisors can issue extra comps, usually for meals, or coupons good for a certain amount.

    Recently I heard of a player who got a $5000 Rolex using his comp points, which means he bet at least half a million dollars at this casino. I could find other things to do with that much money.

  16. Cuttlefish says

    So, ‘Tis… clearly you see how the very specific reinforcers influence gamblers’ behavior. In your opinion as an economist, what does that say about the efficient markets hypothesis (or other economics theories)? Please feel free to wander and comment at length–I’m taking copious notes for the next time I run across that economist here at Cuttlefish U.

  17. Tony •King of the Hellmouth• says

    Because everyone needs Jesus.

    Everyone changes when they meet Jesus.

    How do you meet someone who isn’t alive, let alone need him?

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