Many people give money to their churches and then go less often. Jonathan Gruber writes:
I find strong evidence that religious giving and religious attendance are substitutes: larger subsidies to charitable giving lead to more religious giving, but less religious attendance, with an implied elasticity of substitution with respect to religious giving of -0.92. [TC: If your giving goes up by one precent, your expected attendance goes down by about 1.1 percent.] These results have important implications for the debate over charitable subsidies. They also serve to validate economic models of religious participation.
The question for policy is whether you want churches to be wealthier or fuller. I’ll vote for wealthier, so I have no trouble endorsing the tax break for church giving. It spurs donation but apparently keeps some people at home as well. The irregular attendees are the ones whose behavior tends to vary with dollar donations.
One story is that the irregulars are guilted into going and that we should give them an easy way out, namely a donation. A cash transfer substitutes for a real time investment, which is efficient. Let’s also not forget the intra-family externality on the kids; many would rather play than hear a sermon. An alternative story is that getting these people into church, in the bodily sense, will create a positive social externality. If that’s your view, stop doing fundraising for your church. Perhaps you should stop giving money as well.
Speaking of the economics of religion, this site, put together by my colleague Larry Iannaccone, offers systematic links to the field and its scholars.