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The Economics of Risk and Belief in the Almighty

One can approach “belief” in the almighty from the economics of risk. Rational people can “believe” in seemingly irrational propositions because they have made an economic decision–not one based upon the rationality of the proposition itself. It is a statistical problem, much like insurance.

We must recognize that “belief” is composed of both sincere and insincere components, and is more than a state of mind. Belief implies action–such as praying, attending bible study, modifying behavior, and so forth. Many practicing Christians, Muslims, etc. (some would argue all of them) are “believing” or acting out of their own economic self-interest. It is not a matter of pure logic or even of faith per se–if at all.

Suppose belief requires no cost to you in the present. Suppose further there is a one in a million chance there is an almighty that will place you in a pool of fire because you failed to believe. The “expected value” of belief is positive. There is no cost to being wrong in the belief but a slight chance of dreadful pain for failing to believe. Therefore believe, just in case. It is free full-coverage insurance.

Now, as we increase the cost of “belief” by abstaining from yummy things, tithing, etc. we eventually reach a point where “belief” is no longer so attractive economically and we become INFIDELS. On the other hand, as the cost in the afterlife for the infidel rises (or the benefits to the believer rise) we see belief as more attractive economically. (Economics is more than money–it includes everything considered a “cost” or “benefit” from some action.)

It is rare to find a Christian that is 100% sure in his belief or an agnostic that has 0% belief in God. Most of us fall somewhere along the spectrum. Moreover, there are events in our lives that change these probabilities and sometimes dramatically so. Thus, an agnostic may occasionally talk to God and it makes economic sense as opposed to “rational” sense. A brush with death can inspire an agnostic to a state of vigorous, albeit temporary, supplication.

Understanding this also allows us to see that the economics of a religion can be the same for very different reasons–and therefore why seemingly rational people could believe equally well in religions with vastly different likelihoods. One can have very little probability of being true but assert ghastly consequences for the infidel. Another can appear much more likely to be true, but if the consequences for the infidel are minor then the economics can be the same. Believing in one or the other makes no difference in terms of “expected value”–the probability of the event times the pay-off or cost of that event.

It doesn’t take much in terms of probabilities to make believers out of us when the consequences appear grave. What does it take to “believe” in a virgin birth? Do all Christians actually fully embrace this proposition and understand biology at the same time? No–but if the asserted benefits of “belief” are everlasting life and the costs of disbelief are everlasting hell then even a one in fifty trillion chance pencils out well economically.

When we also integrate the idea of risk tolerance into the equation we can understand why two people with exactly the same rational capacity will “believe” differently. People have different levels of risk tolerance. Suppose the chance of losing $100 from some random event is 1%. If you are willing to pay a dollar to avoid that, you are risk neutral. If you are willing to pay more than a dollar then you are risk averse. If you are not willing to pay a dollar you are a risk lover.

A risk-averse person abhors the idea of the $100 loss and is willing to pay a lot to avoid it. So what if you pay as much as ten dollars, even. That’s the end of it. The risk loving person would rather have the certainty of keeping the pocket money now and accept the possibility of taking the big “hit” down the road. But the odds are against it, so what the heck.

All else the same, two people may “believe” differently even if they assess religious probabilities precisely the same. On a rational level they agree completely on the existence of God. Yet, the risk-averse person will put significantly more effort into “belief” than the risk-neutral or risk-loving person. They will also buy more auto insurance–and not because they believe the probability of an accident is higher.

Once we start to see preachers as insurance salesmen then we can see them competing on a different level from the mere superficiality of logic or biological science. It’s about faster or better pay-outs, what kind of coverage we’re getting, lower premiums, and so forth. It isn’t that science is totally irrelevant–we can see how religions evolve, spring forth, or go extinct as science and society advance. But we are largely addressing the “afterlife” and science has a bit of difficulty proving a negative–that there is no afterlife. So this insurance will always be sold.

An insurance company (church) could attract converts with an aggressive marketing program regarding, say, a Second Coming at an announced date in the near future. But the prudent company will see this as folly and stick with the basic four thousand year old blue chip policies that mature on an individual basis in the afterlife. Not one such policy can be proven to be in default. Does science have such a record?

I only offer this piece as an additional factor in the selection of “belief” vs. the alternative. There are psychological factors that defy economics and such. But it does help us to understand this much–many Christians, if you pin them down, recognize contradictions in the Bible. They really feel a bit uncomfortable with the virgin birth, rising from the dead, making wine out of water and etc. They know Christmas was not the birth of Christ and that the Sabbath is Saturday. They are virtually certain that the book of revelations is a bunch of piffle.

But they “believe”–just in case. It is an economic decision, and no amount of logical argument on your part will change the economics. They may even agree with everything you say on a rational level (that all of it is quite irrational). So quit beating your head against the wall–they have indeed made a rational decision after all–but not on the grounds you think. They figure it’s cheap insurance.