Faith influences wealth accumulation - Religion

USA Today (Society for the Advancement of Education), Dec, 2003

A national study reveals that religious affiliation plays a powerful role in how much wealth Americans accumulate, with Jewish people amassing the most and conservative Protestants the least. Mainline Protestants and Catholics fall in between and are about average with the rest of the population. Moreover, people who attend religious services regularly build more wealth than those who do not.

The effect of religion is robust, even after taking into account inheritances, levels of education, and other factors that may be associated with particular denominations, notes Lisa Keister, associate professor of sociology, Ohio State University, Columbus. "Religion is an important factor in wealth accumulation that hasn't received a lot of attention," Keistar observes. "The results suggest people draw on the methods they learn from religion to develop strategies for saving, investing, and spending, and those tools may be different in various faiths."

Overall, the median net worth of Jewish people in the survey was $150,890, more than three times the median for the entire sample ($48,200). The median net worth for conservative Protestants (which included Baptists, Jehovah's Witnesses, Seventh-Day Adventists, and Christian Scientists, among others) was $26,200. Mainstream Protestants (including Episcopalians, Methodists, Presbyterians, Lutherans, Unitarians, and others) and Catholics were similar to each other and about the average for the entire sample.

While some may concur that the results confirm religious stereotypes, such as the contention that Jewish people are greedy and acquisitive, Keister strongly disagrees." What I'm finding is that families have a powerful influence on how people learn to save, and religion is often an important part of family life. The things children are taught in Jewish homes are very different than those that are taught in conservative Protestant homes."

It is not just religious affiliation itself that has an impact on wealth accumulation. The study found that those who regularly attended religious services tend to be more wealthy. "It seems strange--why should it matter whether you go to church in terms of building wealth?" Keister wonders. "But going to religious services may be another opportunity, especially for Jews, to be indoctrinated with beliefs that help build wealth. Also, it is a social network issue--a church or synagogue can be a good place to meet people with investment tips or money to lean for a new business"

The religious beliefs children learn in their families translate into educational attainment, adult occupations, financial literacy, and social connections that influence adult wealth ownership, she maintains. Religious teachings of different faiths may affect spending and saving strategies in a variety of ways. For example, conservative Protestants often emphasize prayer and trust in God, which may reduce their desire to invest. Conservative Protestants also look forward to the rewards of the afterlife and do not encourage amassing possessions as a way of life. Jews, on the other hand, do not have a strong orientation to the afterlife, but encourage pursuits that will lead to wealth accumulation, such as high-income careers and investing.

Mainline Protestants and Roman Catholics at one time were distinct from each other and from the rest of the population, Keister indicates, but this study illustrates that the distinctiveness has diminished in recent years. The result is that both groups resemble the rest of the population in terms of wealth.

In the study, she examines how religious affiliation leads people of various faiths to take different financial trajectories. For instance, one percent of Jewish people remained asset poor throughout life, compared to 15% of conservative Protestants. About nine percent of mainline Protestants and seven percent of Catholics followed this course. The most common projection is to buy a home relatively early in life and then acquire other assets, such as stocks and bonds. About 35% of Jews followed this path, compared to three percent of conservative Protestants, 22% of mainline Protestants, and 20% of Catholics.

Jewish people stood out in a third trajectory in which people invest early in life in high-risk, high-return properties such as stocks and bonds and build wealth quickly while putting less emphasis on homeownership. About one-third of Jews followed this path, compared to lees than one percent of conservative Protestants, seven percent of mainline Protestants, and four percent of Catholics.

Keister emphasizes that religion is only one among many factors that influence wealth. This research is part of a larger series of studies Keister is doing to explain why some individuals accumulate more money than others. She asserts that once she began studying wealth, the impact of religion stood out plainly "Religion keeps coming up in any model you run. ... It's something you can't ignore, but there's been little effort to explain the connection... "