Stocks Are Down; Religion Is Up

Today’s Globe and Mail has an interesting article with regard to the recent upsurge in church attendance. See… No news here really. Religious belief and behavior are to large extent a response to perceived danger. That is not to say that this is all religion is. It is a complex social phenomenon that performs many different roles in different lives, and does a lot of good as well as a lot of bad. Importantly, some religious organisms perform a far healthier role in the lives of their adherents than others. However, a common denominator and distinguishing feature of virtually all significant religious movements is the way in which they exploit basic human existential and other fears, and create a wide range of additional fears in order to enhance their palliative appeal.

The worst part of religion is a bit like a golf coach who makes his client so insecure that he can only play well with the coach’s help. Better yet, think of a massive weight loss clinic that prescribes inefficient exercise programs while surreptitiously slipping its patients sugar and fat, and keeping them impossibly busy and otherwise doing all it can to prevent them from comparing their weight-loss program to others that are easily available. The ultimate in this regard are the human batteries in a vat, as portrayed by “The Matrix”.

In this regard, fear and desire are opposite sides of the same coin. If you don’t attend church and do the things your religious leaders say you must do (including giving your time and money to them), you face both the prospect of losing out on incredibly wonderful blessings in this life, and after death, as well as running the risk of terrible punishment, again, both during this life and after death. Religious groups are social organisms. They need food, which mostly consists of human energy. Money is a form of stored human energy.

I again note, to fend off the inevitable criticism I will receive from some of my religious but liberal friends, I am not critical of all religion in the terms just mentioned, just most of it. I am happy to debate the point if necessary. With few exceptions, the problem with religion in this regard is one of degree, not of kind.

Interestingly, the nexus between perceived risk and human behaviour can be generalized even further. There is a strong correlation between the perception of risk and superstitious behaviour in general. Michael Shermer nicely describes this at pages 294 and 295 of his excellent book, “Why People Believe Weird Things”, which despite the casual nature of the title is an elegant summary of academic research.

Shermer first notes that religious believers tend to have, in general, a high “external locus of control”. That is, they believe that they have less personal control over what happens to them, and instead are subject to external forces that are beyond their control. This leads to greater anxiety across-the-board. People with a high external locus of control tend to believe in things like ESP, witchcraft, spiritualism, reincarnation, precognition, and are in general more superstitious than those whose locus of control is more internal. Internal locus of control people are generally, “… more confident in their own judgment, skeptical of authority, and less compliant and conforming to external influences.” As already noted, they are less superstitious in general, and this means less inclined toward religious belief.

If you want to find out whether your locus of control is external or internal, don’t ask yourself or look in the mirror. Go to someone who can assess you in this regard or at least try a survey like the one you can find at… We are virtually incapable of self diagnosis (or treatment) when it comes to things like this. But I digress.

Shermer then went on to generalize this point even further. He summarized research conducted by the great anthropologist Bronislaw Malinowski, who discovered that there was a correlation between how far certain South Seas Islanders had to go offshore to fish, and the degree to which they used superstitious rituals prior to embarking.

“In the calm seas of the lagoons, there were very few rituals. By the time they reach the dangerous waters of deep-sea fishing, the Trobianders were also deep into magic. Malinkowski concluded that magical thinking derived from environmental conditions, not inherent stupidities: ‘We find magic wherever the elements of chance and accident, and the emotional play between hope and fear have a wide and extensive range. We did not find magic wherever the pursuit is certain, reliable, and well under the control of rational methods and technological processes. Further, we find magic where the element of danger is conspicuous.’”

I pause here to again emphasize that it is the perception of risk, not real risk, that causes superstitious behaviour. Accordingly, institutions that depend upon religious behaviour to get what they need to survive will inculcate the perception of risk in order to keep the donations of time and money rolling in. This weakens their adherents in some ways. Other predators in the social environment take advantage. Here we find the explanation for Utah’s world leading record in terms of financial fraud and multilevel marketing organizations. It is not that Utahans (and accordingly Mormons) are stupid. Rather, they have been systematically weakened by the religious belief system within or around which they were raised. Their locus of control tends to be more external than normal. They are accordingly more susceptible than usual to being tricked by apparently authoritative people. If they can be induced to feel “good” about a “business opportunity”, they will tend to suspend disbelief much more quickly than most similarly educated people, often on the basis that “things happen for a reason” – a clear belief marker of high external locus of control people.

Shermer then extends the fishing analogy to baseball. He says,

“Think of the superstitions of baseball players. Hitting a baseball is exceedingly difficult, with the best succeeding barely more than three out of every 10 times at bat. And hitters are known for their extensive reliance on rituals and superstitions that they believe will bring them good luck. The same superstitious players, however, dropped the superstitions when they take the field, since most of them succeed in fielding the ball more than 90% of the time. Thus, as other variables go into shaping belief that are themselves orthogonal [RDM note – unrelated] to intelligence, the context of the person and the belief system are important.”

So, back to religion and the economy. An uptick in religious belief and behaviour of the type described above is as predictable in our current circumstances as it is in cases where someone has become seriously ill or is going to war, both of which have been clearly demonstrated by scientific study. There is some truth in the adage that there are no atheists in foxholes, though this is an indication of a tendency, not an absolute rule.

In light of all of this, here is an investment tip. In these difficult economic times, relatively inexpensive products that play on fear and feel like a form of insurance will do well. Religion is just one of these. Another is, I suspect, lottery tickets. But the big winner, for those who have the stomach for it, is the self-help industry. It uses many of the same tools as religion, and we should expect to see an upsurge in that regard for the same reasons that cause people to go back to church as their stomach’s churn. And of course, as is the case with religion, there are better and worse self help gurus. The best provide sound advice and do not exercise the influence they could to take advantage of their adherents. The bad act just like the worst of religious leaders.

If you want to determine whether your self help guru or religious institution is “bad”, don’t trust your own judgement or ask your fellow believers. We can’t self assess here any more than we can with regard to our own personality type. Go find someone who has studied lots of religious groups and ask her to help you see the big picture and locate yourself in it.

This reminds me of a seminar I attended a little while ago. A bankruptcy and insolvency lawyer was presenting a case study, designed to help the rest of us understand the basics of insolvency law, and some of the practical difficulties we should expect to encounter as some of our clients face potentially business ending financial turmoil. He described a company that in June of 2008 had a market capitalization well into the billions of dollars, and filed for bankruptcy last December. A small group of senior managers saw their personal net worth decline by hundreds of millions of dollars in the course of several months. The insolvency lawyer noted that this company’s circumstances were significantly worsened by management’s inability to face the reality of their situation. He said this is a common problem. People generally speaking are slow, or unable, to recognize painful realities, he told us. He indicated that one of the professional advisor’s important roles is to bring objectivity, and sometimes painful reality, to bear on internal management. In addition to professional skill, one of the huge advantages a professional advisor has in this regard is a lack of the kind of financial and other ego related investments in the company. These tend to limit the manager’s ability to perceive, whereas the professional advisor is not similarly handicapped.

The same principles apply when it comes to religious belief. The longer a person has lived within a particular religious community, the more social capital they have built up as a result of providing service to other people within the community, the more often they have expressed publicly their belief and commitment to a particular religious point of view, etc., the less likely they are to perceive shortcomings in the institution to which they belong and beliefs that form a good part of their life’s foundation. Accordingly, anyone interested in reality in this regard needs to find objective help. The best source of objective helps is the academic community, which has studied a wide range of different kinds of religious and other belief systems, and is in a position to provide the most accurate comparative information available. Of course, the information available here is far from perfect. The first step along the road to recognizing religious reality is acceptance of the fact that imperfect information is the best we have. There is no perfectly reliable source of “truth”. All we can hope to do is identify the people with the best track record when it comes to accurately describing how things work, and predicting behaviour in that regard. Again, the academic community is the clear winner in this regard.

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