Rituals or good works: social signaling in religious organizations

As Weber (1904) recognized, Calvinistic beliefs about predestination - perhaps counter-intuitively- constitute a powerful incentive for good works; an individual wishes to receive assurances about her future prospects of salvation, and good works may provide a positive signal about such prospects. These beliefs also create a social pressure to preform, as good works can also signal to others that individuals belong to the elect, and are therefore likely to behave well in the future. In this paper we focus on this social signaling incentive, and show that such a behaviour-based religious organization allows individuals to capture social surplus from coordination. We contrast these organizations with ritual-based religions, introduced in Levy and Razin (2009) and show that a behavior-based religion provides a higher average material welfare to its members. We use our model to discuss the Protestant Reformation in Geneva, a process characterized by the reduction of rituals along with the creation of mechanisms to monitor individuals' behaviour and inform others about it.