Newsflash: Dick Thaler and evangelical megachurches compete to redeem the financial soul of the miscarried American
March 19, 2012
Perhaps because of my budgeting difficulties as a PhD student, or perhaps due to my nerdy delight with Mint.com (the app), I have long been fascinated by the problem of personal finance. Unsurprisingly, post-crisis interest in personal finance has also fueled the rise of behavioral economics – first within academia, now in the White House and in London’s Whitehall.
In Nudge, Thaler and Sunstein offer advice to restore rational decision-making to consumers. Knowing that consumers will buy whatever you put in front of the cash register, supermarkets can make their life healthier by stacking carrots there, instead of candy. By shaping choice architecture, in other words, a government that believes in libertarian paternalism can improve the lot of its denizens.
But as Kate Zaloom argued this past Friday in an excellent presentation at the LSE, there’s a social (even spiritual) dimension to personal finance that goes beyond the tweaking of the menu. In “God’s Money Managers: Volatile Markets and the Problem of Planning a Life,” Zaloom drew a fascinating parallel between behavioral economists such as Dick Thaler and evangelical megachurches.
Zaloom studied the financial seminars and workgroups at a Californian megachurch. These seminars, she found, helped the faithful distance themselves from making consumption a measure of worth. The seminars also assisted the faithful with bookkeeping. And they promoted a personal conversation with God about expenditure. In one case, a woman was able to resist buying some seriously tempting shoes thanks to personal dialogue with the Holy Spirit.
In a way, then, both Thaler and the megachurches are out to do the same — restore economic “rationality.” Zaloom thus fleshed out just how incredibly paternalist “libertarian paternalists” are. They’re right up there with evangelical pastors.
I would ask: how do these religious groups stack up to behavioral economists? Rather well, it seems. For they rely on different and arguably more potent mechanisms. While the behaviorals operate at the level of the subconscious, removing choice alternatives from awareness, the bible study groups promote extra awareness of the consumer’s own emotional state. They do this through conversations with oneself — or God, depending on one’s own view.
Second, while the behaviorals put forth a mechanism for restraint that is individual, the churchgoers push a social one — the cell, that effective guerrilla group that is the cornerstone of the successful American megachurch.
Third, while the behavioral revolution has little place for political debate (it’s just a matter of restoring “rationality”), the religious accountants are out to promote alternative values. Frugality. Freedom from consumption.
The evangelicals, I believe, beat Thaler. The question, however, is how can non-religious Americans benefit from these mechanisms. We may start to see the rise of alcoholic anonymous for the seriously financially distressed. Yet that still leaves out the majority of people — the not quite financially alcoholic, just messy and unable to accumulate. I’m afraid they’ll have to stick to carrots in the supermarket cashier line.