Wednesday, December 16, 2009

Has the theory of the Protestant work ethic just collapsed?

Has a young Harvard graduate student in economics dealt a deadly blow to Max Weber’s theory that Protestantism favours economic development? Davide Cantoni has just produced a brilliantly argued paper which takes economic data from Catholic and Protestant cities in Germany from 1300 to 1900, subjects them to meticulous multivariate analysis, and finds no evidence that Protestantism per se made people richer.

Cantoni, whose CV reveals that he is a 28-year-old doctoral student with joint German and Italian citizenship, knows that he is walking into a minefield. Weber’s reputation as perhaps the greatest of all sociologists does not rest solely on his famous thesis; but it has iconic status and both drew on and developed the widely held belief that, to put it crudely, Protestants get out of bed earlier in the morning than Catholics.

Weber’s thesis proposes that the specifically Calvinist belief in predestination persuaded its adherents to pursue capitalism as an end in itself: there was nothing you could do to contribute to your salvation, so you might as well make money as an end in itself (and, in any case, a healthy bank balance could be a sign that you were among the elect). But, in fact, lots of thinkers before Weber had concluded that America, England and northern Europe were rich because they had freed themselves from superstitious, hierarchical popery.

It’s this broader version of the “Protestant work ethic” that Cantoni exposes to scrutiny, since the German cities of the Holy Roman Empire that he analyses were mostly either Lutheran or Catholic. (There were Calvinist cities, but their joyless creed doesn’t seem to have made a difference.) The abstract of his paper, which can be read in pdf format, reads as follows:
The Economic Effects of the Protestant Reformation: Testing the Weber Hypothesis in the German Lands


Many theories, most famously Max Weber ’s essay on the “Protestant ethic,” have hypothesized that Protestantism should have favored economic development. With their considerable religious heterogeneity and stability of denominational affiliations until the 19th century, the German Lands of the Holy Roman Empire present an ideal testing ground for this hypothesis.

Using population figures in a dataset comprising 272 cities in the years 1300–1900, I find no effects of Protestantism on economic growth. The finding is robust to the inclusion of a variety of controls, and does not appear to depend on data selection or small sample size. In addition, Protestantism has no effect when interacted with other likely determinants of economic development. I also analyze the endogeneity of religious choice; instrumental variables estimates of the effects of Protestantism are similar to the OLS results.

A total of 272 cities over 600 years: that’s some sample. And controlling for various factors is no easy matter – as this sort of equation demonstrates:

ln(ui t ) = χi + χt + ∑ ατ · Proti · Iτ + ∑ βτ · controli · Iτ + ∑ γτ · controli · Proti · Iτ + ε i t

Still, it’s worth ploughing through as much of Cantoni’s paper as you can understand, because so many common preconceptions about thrifty Protestants and bone-idle Catholics bite the dust. He sets out to test the hypothesis that the ethos of Protestantism (whether purely doctrinal or based on distinctive commercial practices) gave an economic advantage to certain German cities. And the hypothesis flunks his test because, even when Protestant cities perform better than Catholic ones, there is a better “fit” with other variables. More important, on the whole Catholic cities developed just as successfully as their Protestant equivalents.

Catholic and Protestant cities, though different in many respects, both became economically dynamic over the centuries – thanks, mostly, to the benefits associated with the emergence of the modern nation state, something that post-Counter Reformation Catholic rulers nurtured alongside their Protestant opposite numbers. Here’s Cantoni’s conclusion:

While there are many reasons to expect Protestant cities and states to have been more economically dynamic during the past centuries—because of their work ethic, their attitude toward business, their encouragement of literacy—the present paper finds that there is no effect of religious denominations on a likely indicator of economic development, city size. Despite their differing views on religious matters, Protestants and Catholics might not have been so different in their economic behavior after all.

This research, incidentally, is described as a “Job Market Paper”. I can’t imagine that Cantoni will have any difficulty finding the right outlet for his own work ethic.



The Pasadena Pundit said...

If I remember Weber's book The Protestant Ethic and the Spirit of Capitalism correctly he did not compare Protestants and Catholics across different countries -- only in different counties or parishes.

William Hone, Jr. said...

Thanks for bringing this article to my attention. In a roundalay of intellection too abstruse to recount, it served as a counteractant to my idealistic analytical style. I'm glad to cite Paralipomena (2) in my blog as the antidote to the anodyne of my favorite middle-range theories.