1. Introduction
Can
economic models truly capture the essence of religious faith? This question
becomes particularly pressing as economics expands its analytical scope into the
religious sphere. At first glance, modern economics, with its focus on
maximizing material well-being in the face of scarce resources, might seem
worlds apart from the realm of religion. The materialistic foundations of
economic theory—rooted in utility maximization, rational choice, and quantifiable
outcomes—appear fundamentally misaligned with the spiritual dimensions of
religious experience, which often emphasize transcendence, Divine Guidance, and
non-material aspects of human existence.
However,
this apparent disconnect belies a complex relationship that traces back to Adam
Smith, who devoted significant attention to religious organizations in “Wealth
of Nations”.
Smith's analysis of religious institutions as rational responses to social
needs set an early precedent for examining faith through an economic lens.
Following Smith's work, the field was largely set aside from religion for
around two centuries before experiencing a renewed interest in the late 20th
century.
This resurgence of interest has brought sophisticated mathematical models and
empirical techniques to bear on religious expressions, raising both promising
insights and troubling questions about the adequacy of economic frameworks for
understanding spiritual experience.
Iannaccone’s
seminal work categorized economics of religion into three distinct areas: the
application of economic theory to explain religion, the examination of
relationships between religion and economic variables, and the use of religious
principles to assess economic policies.
While all three domains have generated interesting insights, this paper
focuses critically on the first area, specifically its application to Islam.
The choice of focus is significant for several reasons. First, initial research
in this field predominantly examined Judaism and Christianity, reflecting the
predominance of American scholars.
This Western-centric development raises concerns about cultural bias, as
economic models developed in predominantly Christian contexts may incorporate
assumptions that do not hold in Islamic societies. As Said argued, Western
academic approaches to Islamic societies often suffer from orientalist biases.
Second,
while the other two areas of economics of religion offer valuable insights, with
the third strand forming an integral part of Islamic studies and the
second providing useful perspectives on religion-society interactions, they
face distinct methodological challenges. The second area particularly struggles
with endogeneity issues in causal inference
and fundamental problems in defining and measuring religiosity. As
Tarakeshwar et al. argue, the multidimensional nature of religiosity resists
simple quantification.
Beyond
these empirical challenges, more fundamental concerns arise from the
theoretical frameworks employed in the economics of religion. The core
theoretical foundation for economic analyses of religion lies in the rational
choice approach, which emerged as an attempt to bridge gaps in the sociological
study of religion.
In neoclassical economics, rationality is defined as “the maximization of
subjective utility—that is, the maximization of one’s desires,” assuming
logical omniscience while typically ignoring emotions. This
framework has generated significant criticism. Montgomery questions its ability
to explain belief formation,
while Bruce argues it only provides insights for contexts where religion holds
minimal significance.
Kumar identifies fundamental problems with treating religious concepts as
conventional goods.
We employ a case study approach to analyze influential works that apply
economic frameworks to the Islamic religion, revealing consistent patterns of
materialistic interpretation and theological oversight.
A
central issue we identify is that economic models, despite their mathematical
sophistication, consistently struggle to incorporate the transcendent
dimensions of religious experience into their analytical frameworks. When
applied to Islam, these models often impose materialistic interpretations that
reduce complex spiritual practices to rational calculations and utility
maximization. This reductionist tendency not only misrepresents the essential
nature of religious behavior but also reflects a deeper philosophical tension
between economic methodology’s demand for measurable variables and religion’s
inherently transcendent dimensions. As a result, these models risk
fundamentally mischaracterizing the nature of religious experience by reducing
spiritual experience to purely material considerations. As our analysis
demonstrates, this limitation manifests across various applications, from
studies of veiling practices to analyses of religious conversion dynamics,
suggesting a systematic bias in economic approaches to religion.
A fundamental challenge in applying
economic models to Islamic practices arises from the disconnect between
economic methodology and the Maqāṣid al-sharīʻah (Higher
objectives of al-sharīʿa). As articulated by Al-Ghazālī and
Al-Shāṭibī.
Islamic law aims to protect and promote five essential objectives: faith (dīn),
life (nafs), intellect (ʻaql), posterity/lineage (nasl), and
property/wealth (māl). These objectives form an integrated hierarchical
system where economic considerations, while important, are subordinate to and
guided by higher spiritual and ethical principles. Economic models that focus
solely on material incentives and utility maximization risk mischaracterizing
Islamic institutions by divorcing them from this broader framework of human
welfare that includes both worldly and spiritual dimensions.
Moreover,
as Chapra argues,
Islamic economic principles emerged from a coherent framework seeking to
promote human wellbeing across multiple dimensions simultaneously. The
challenge for economic analysis thus extends beyond mere technical limitations
to a more fundamental epistemological question: can models that prioritize
material optimization adequately capture institutions designed to serve both
spiritual and material purposes? This paper argues that current economic
approaches, despite their mathematical sophistication, often fail to recognize
how Islamic principles operate as part of an integrated system promoting human
welfare across multiple dimensions. Through detailed case studies, we show how
this methodological limitation leads to reductionist interpretations that strip
religious practices of their essential character and misrepresent their
operation in historical and contemporary contexts.
The
significance of this investigation extends beyond academic critique, reaching
into fundamental questions about how we understand and analyze religious traditions
in modern social science. As economic analysis continues to expand its reach
into various domains of human activity, understanding its limitations and
potential biases in religious contexts becomes increasingly important. This
understanding is crucial not only for theoretical accuracy but also for
practical applications in policy-making and institutional design. It is
particularly vital given the explosive growth of Islamic economics and finance,
which has evolved from a niche field into a global industry managing over $4
trillion in assets in 2021.
In this rapidly expanding sector, where the intersection of economic and
religious principles demands careful consideration, the consequences of
misunderstanding or misrepresenting religious principles through reductive
economic models can have far-reaching practical and theoretical implications.
Furthermore, how we analyze religious beliefs and practices through economic
frameworks has broader implications for cross-cultural dialogue, policy
formation, and the development of rigorous approaches to studying human
behavior that can accommodate both material and spiritual dimensions.
The
remainder of this paper is organized as follows. Section 2 presents our
theoretical framework, examining how economic approaches to religion often
result in reductionist interpretations through the commodification of religious
practices and neglect of theological foundations. Section 3 outlines our
methodology and presents our detailed analyses of three influential studies:
Carvalho’s examination of veiling practices,
Michalopoulos et al.’s analysis of Islamic economic doctrine, and Saleh
and Tirole’s study of religious conversion dynamics. Section 4
synthesizes findings across the case studies, developing broader implications
for the study of religion through an economic lens. The final section
concludes.
2. Theoretical Framework: Economic Models and Religious Understanding
2.1. The Commodification of Religious
Experience
The
application of economic models to religion fundamentally relies on a process of
commodification—the transformation of non-market entities into objects of
economic value.
When applied to Islam, this process raises significant methodological and
ethical concerns that extend beyond mere technical considerations. The
commodification of religious practices manifests in two primary ways: the
economic interpretation of Islamic law and the reduction of religious behavior
to economic calculations.
This
commodification process becomes particularly problematic when researchers
explicitly attempt to remain “agnostic as to its theological foundations.” While such
methodological neutrality might appear scientifically objective, it
inadvertently imposes a materialistic framework that misrepresents both Islamic
doctrine and religious behavior. The very attempt to separate economic analysis
from theological foundations reflects what Al-Sakrān criticizes as “Ansanat
al-Turāth” or “humanizing heritage”—the reduction of religious beliefs and
practices to purely material interpretations while dismissing moral or
religious motives.
2.2. Fundamental Contradictions in Economic
Approaches
The application of economic models to Islam reveals
several fundamental contradictions that challenge the validity of this
analytical approach. A primary tension emerges in the treatment of Islamic law,
which, derived from the Qurʼān and Sunnah, represents a fixed set of divinely
ordained principles rather than market-responsive regulations. As Hallaq
demonstrates, the development of Islamic law was driven by complex theological,
ethical, and social factors that resist reduction to economic considerations.
When economic models treat Islamic laws as endogenous responses to material
conditions, they fundamentally misrepresent both their nature and origin. This
misrepresentation points to a deeper methodological conflict between economic
and religious frameworks.
A
second crucial contradiction arises from economic models’ foundational
assumption of self-interest maximization, which directly conflicts with Islamic
teachings emphasizing self-sacrifice and resistance to worldly temptations. The
Qurʼān explicitly warns against taking
one’s desires as a deity (45:23), presenting a direct challenge to the economic
assumption of pure utility maximization. This fundamental contradiction aligns
with Nasr’s influential critique of the modern economistic worldview, which he
argues is fundamentally incompatible with traditional Islamic conceptions of
human nature and society.
The conflict between economic rationality and Islamic principles of
self-sacrifice reveals the limitations of applying conventional economic
frameworks to religious behavior.
Perhaps
most fundamentally, economic models struggle to capture Islam’s strong
eschatological dimension, focusing instead on measurable, worldly outcomes.
Islamic thought emphasizes an eternal perspective that often requires believers
to make decisions that may not maximize short-term utility. This orientation
toward eternal consequences, which Smith and Haddad identify as central to
Islamic thought, remains largely invisible in economic analysis. The
inability to incorporate this transcendent time horizon into economic models
represents not merely a technical limitation but a fundamental incompatibility
between economic methodology and religious understanding.
2.3. Methodological Limitations
The
economic approach to religion exhibits several critical methodological
limitations that become particularly apparent in its application to Islam. At
the heart of these limitations lies the rational choice framework, which
fundamentally mischaracterizes religious decision-making by positing that
religious behavior can be explained through utility optimization and
cost-benefit analysis.
While scholars have attempted to defend this approach, with Carvalho applying
economic grounds to rationalize religious beliefs in club models and
Iannaccone advocating for modeling religious changes through economic
variables rather than changing beliefs,
these attempts ultimately fail to capture the essence of religious commitment.
The reduction of spiritual choices to rational calculations strips religious
experience of its transcendent character.
This
reductionist tendency reflects a broader pattern in secular approaches to
religion, what Taylor terms “subtraction stories,” where complex religious expressions
are reduced to simpler, materialistic explanations. Fine and
Milonakis identify this pattern as part of a larger trend of economic
imperialism—the increasingly problematic application of economic methods to a
phenomenon traditionally studied by other disciplines. In the
context of religious studies, this methodological overreach becomes
particularly pronounced, as economic models struggle to accommodate the unique
characteristics of religious experience and behavior.
The
economic approach to religion also encounters significant epistemological
constraints that manifest in two distinct but related philosophical
shortcomings. First, the framework’s reliance on relative ethics—the assumption
that religious choices can be reduced to relative trade-offs between costs and
benefits—fundamentally conflicts with Islamic theology’s assertion of absolute
moral truths. This relativistic framework cannot adequately account for the
Islamic understanding of Divine commands as absolute and unconditional,
creating a fundamental misalignment between economic methodology and religious
reality.
Second,
the approach suffers from an inherent scientism that reflects a deeper
epistemological overreach. By insisting that all meaningful knowledge must
conform to modern social science methodology, economic approaches arbitrarily
exclude valid forms of knowledge arising from revelation. This scientistic bias
leads to what Taylor calls the “flattening” of religious experience, where
transcendent dimensions of faith are either ignored or reduced to purely
naturalistic explanations.
Together,
these limitations reveal not merely technical challenges but fundamental
incompatibilities between economic methodology and religious understanding. The
attempt to force religion into economic frameworks risks distorting our
understanding of religious experience and behavior, particularly in contexts
where transcendent dimensions play central roles. These methodological
constraints suggest the need for more nuanced approaches that can better
accommodate the unique characteristics of religion while maintaining analytical
rigor.
2.4. Implications for Religious Analysis
These
theoretical limitations suggest that economic models are fundamentally
ill-equipped to capture the essence of religious experience and behavior. The
inability to accommodate transcendent dimensions of faith, Divine Revelation,
and absolute moral truths indicates a need for a new theoretical framework that
can integrate both economic and spiritual perspectives.
This
theoretical understanding informs our subsequent analysis of specific economic
models applied to Islamic tradition. We examine how these fundamental
limitations manifest in practice and consider what this reveals about the
broader challenge of studying religion through social scientific frameworks.
3. Critical Analysis of Economic Models Applied to Islam
3.1 Methodology
This
paper employs a case study approach, presenting a chronological review of three
representative studies. For each study, we offer a summary followed by a
critical commentary highlighting underlying issues. This methodology systematically
examines the evolving application of economic models to Islamic principles over
time. It also enables in-depth analysis of specific approaches and their
implications.
The
selection of these case studies was based on their prominence in the field,
their diverse approaches to modeling Islamic principles, and their potential to
illustrate key issues in the application of economic models to religious beliefs
and practices. By examining these studies in detail, we aim to identify common
threads and recurring challenges in this area of research.
Our
analysis is informed by a multidisciplinary perspective, drawing on insights
from economics, religious studies, and philosophy of social science. This
approach allows us to evaluate not only the technical aspects of the economic
models but also their broader implications for our understanding of religion
and its role in society.
3.2. Case Studies
3.2.1 Economic Rationalization of Religious Practice: Veiling and Identity
Economics
Summary:
Carvalho’s
2013 study,
“Veiling,” published in The Quarterly Journal of Economics, attempts to explain
the increased prevalence of veiling among educated, urban, working Muslim women
since the 1970s. This phenomenon, often referred to as the “new veiling
movement,” has puzzled many scholars given its apparent contradiction with
modernization theory, which would predict a decline in religious practices with
increased education and urbanization.
Carvalho
employs tools from behavioral economics and game theory, situating the phenomenon
within the economics of identity literature. The core of his model posits
veiling as a mechanism to avoid regret or social disapproval while capitalizing
on economic opportunities. In this framework, veiling serves as a commitment
device that allows women to participate in the modern economy while maintaining
their religious identity and avoiding temptations to engage in religiously
prohibited behavior.
The
model makes several key predictions:
-
In societies that enforce veiling,
religiosity will decrease over time as parents have less incentive to invest in
their children’s religious education.
-
In societies that ban veiling, women
will either veil and integrate into the economy if economic returns are high,
or choose to stay at home and not integrate.
-
Veiling is more likely among women
with intermediate levels of religiosity, as highly religious women may choose
seclusion, while less religious women may choose full integration without
veiling.
Carvalho
supports these predictions using ethnographic, historical, and survey-based
studies on veiling but does not provide empirical evidence of his own.
Critical
Analysis:
While Carvalho’s
model offers a new approach to understanding the veiling phenomenon through an
economic lens, it raises three fundamental concerns:
Materialistic
Interpretation: The model’s setup reveals a predominantly materialistic
interpretation of veiling. The absence of spiritual considerations such as
faith, devotion to God, or concepts of sin and virtue strips the veil of its
primary religious essence. This approach reduces a complex religious practice
to an economic calculation.
Neglect
of Theological Foundations: The model does not engage with the theological
basis of veiling in Islam. While Carvalho cites Quranic verses regarding women’s
covering, he fails to address the established religious obligation of veiling
in Islamic law. This fundamental oversight disconnects his economic analysis
from the practices based on religious foundations, where veiling is a Divine
command. The model’s secular framework thus misses the essential religious
character of the practice.
Assumption
of Economic Primacy: There is an implicit assumption in the model that economic
gain takes precedence over religious observance. This is evident in the
prediction that women in societies banning veiling will only remain veiled if
the economic returns they give up are not very high. Such an interpretation may
not accurately reflect the priority many religious individuals place on their
faith over material considerations.
Maqāṣid
al-sharīʻah Perspective: From a Maqāṣid
al-sharīʻah framework, veiling serves multiple interrelated purposes
that cannot be reduced to economic calculations. In particular, veiling exemplifies
how a single practice simultaneously serves multiple Maqāṣid - it
expresses religious devotion (Ḥifẓ al-Dīn), protects dignity
and modesty (Ḥifẓ al-nafs), and helps maintain family and social
stability (Ḥifẓ al-nasl). The model’s focus on economic incentives
and identity management misses how veiling, as a Divine command, integrates
these spiritual, personal, and social dimensions. While the model may capture
certain observable patterns in veiling adoption, its reductionist framework
cannot explain how this practice serves as a manifestation of Islamic
principles aimed at human flourishing across multiple dimensions,
simultaneously. A more complete analysis would recognize veiling as part of an
integrated system of Divine guidance that transcends pure economic
rationalization.
3.2.2 Environmental Determinism and Religious Doctrine: Geographic Origins
of Islamic Economic Principles
Summary:
The
2016 paper by Michalopoulos, Naghavi, and Prarolo, titled “Islam,
Inequality and Pre-Industrial Comparative Development,” published in the
Journal of Development Economics, presents a model aimed at explaining the
origins and institutionalization of Islamic economic doctrine. The authors
argue that the economic principles embedded in Islam emerged as a response to
the specific geographic and economic conditions of 7th-century Arabia.
The
core of their model rests on two key observations about the Arabian Peninsula
at the time of Islam’s emergence:
- The
unequal distribution of land quality across the region.
- The
critical importance of trade routes for economic activity.
Based
on these factors, the authors propose that the stark inequality between
resource-poor and resource-rich areas led to conflict, particularly in the form
of raids on trade caravans by inhabitants of poorly endowed regions. In this
context, they argue, Islamic economic doctrines emerged as a conflict
resolution mechanism.
The
model suggests that the combination of static redistribution (e.g., Zakāt or
mandatory alms-giving) and dynamic redistribution schemes (e.g., Islamic
inheritance laws and the prohibition of interest or Ribā) served to
address this potential for conflict. Moreover, the model predicts that in this
context, it would be optimal for both rich and poor to adopt these economic
principles to maintain social stability and facilitate trade.
Critical
Analysis:
Michalopoulos et al.’s
economic model of Islam presents a mixed contribution that requires careful
evaluation:
Environmental
Determinism and Divine Origins: The model presents a form of geographic or ecological
determinism, suggesting that the Islamic Economic Doctrine was primarily shaped
by the specific ecological conditions of 7th-century Arabia rather than Divine
revelation. This perspective conflicts with the fundamental Islamic belief that
the Qurʼān and the teachings of the Prophet Muhammad are divinely inspired.
Methodological
Framework: . Pure economic methodology cannot fully encompass Islamic economic
principles, which serve both spiritual and material purposes. Islamic economic
teachings simultaneously elevate the soul while organizing society, a dual
purpose that purely economic models cannot fully encompass.
Universality
and Application: The model’s emphasis on 7th-century Arabian conditions
potentially undermines the universal nature of Islam. It falls short in
recognizing that Islamic economic principles, being divinely ordained, offer
solutions across different contexts and times. This limitation highlights the
need for frameworks that can analyze both the temporal benefits and eternal
wisdom of Islamic teachings.
Implications
and Understanding: While the model’s focus on material outcomes may provide
valuable insights into the societal benefits of Islamic economic principles, it
risks reducing religious adherence to pure utility maximization. A more
complete framework would recognize that believers follow these principles
primarily out of submission to God, while their beneficial social outcomes
demonstrate divine wisdom.
Maqāṣid
al-sharīʻah Perspective: The geographic-trade model proposed by
Michalopoulos et al. fundamentally mischaracterizes Islamic economic
institutions by reducing them to instrumental solutions for resource
distribution problems. The Maqāṣid al-sharīʻah (Higher Objectives
of al-sharīʿa) articulates a hierarchical system of primary (Ḍrwryāt),
secondary (Ḥājīyāt), and tertiary (Tḥsynyāt)
objectives, where economic institutions serve multiple intersecting purposes
beyond mere redistribution.
The model’s focus on geographic inequality as the primary driver of
institutional formation cannot account for the remarkable consistency in
Islamic economic principles across diverse geographic and social contexts. The Maqāṣid
framework, as elaborated by classical scholars and contemporary theorists like
Auda
and Khan,
shows that Islamic economic institutions were part of a comprehensive system
designed to achieve specific human development objectives. This
multidimensional purposiveness of Islamic economic institutions, firmly
grounded in theological and legal principles, suggests that any model focused
solely on geographic or economic factors will inevitably miss crucial aspects
of their origin and persistence.
The
concept of Maṣlaḥat (public benefit) in Islamic legal theory
reflects scholars’ systematic efforts to understand how economic rules align
with human needs and social objectives through established methodological
principles.
This suggests that Islamic economic institutions are best understood not as
responses to specific geographic or economic conditions, but as elements of a
comprehensive system that scholars have interpreted as oriented towards human
welfare across all contexts where Muslims lived and traded. The apparent
alignment of Islamic economic institutions with multiple objectives suggests an
institutional depth that extends beyond simple solutions to resource
distribution problems.
3.2.3 Taxation and Religious Conversion: Economic Analysis of Historical
Religious Change
Summary:
The
2021 paper by Saleh and Tirole,
“Taxing Identity: Theory and Evidence from Early Islam,” published in Econometrica,
presents a sophisticated model attempting to explain the interrelationship
between poll tax (Jizyah), uniform land tax, and conversions to Islam by
Egyptian Copts. The authors employ an identity-based model nested within an
extraction model to explore these dynamics.
The
core of their model proposes that rulers face a trade-off between maximizing
tax revenue and inducing religious conversion. The Jizyah, a poll tax imposed
on non-Muslims in Islamic states, plays a central role in this model. The
authors suggest that rulers could manipulate the Jzyh rate to either maximize
revenue or encourage conversion to Islam, depending on their priorities.
- Key
predictions of the model include:
- A
ruler more concerned with conversion will impose a higher Jzyh, inducing more
conversions but potentially lowering overall tax revenue.
- The
conversion rate is influenced by the difference between the Jzyh (imposed only
on non-Muslims) and the land tax (uniform for all).
- When
identity is difficult to change, people may choose to pay higher taxes rather
than convert or emigrate.
The
authors test these predictions using historical data from Egypt, finding
support for their identity-based model.
Critical
Analysis:
Saleh
and Tirole’s model on the economic dynamics of religious conversion and
taxation in early Islamic societies raises several significant concerns:
Reductionist
View of Jzyh: The model presents the Jzyh primarily as a tool for revenue
extraction or inducing conversion, neglecting its complex religious, legal, and
social dimensions in Islamic thought. This simplification risks misrepresenting
the nature and purpose of Jzyh as understood in Islamic jurisprudence and fundamentally
misrepresents the divine nature and sacred purpose of Jzyh as established in
Islamic jurisprudence, where it serves as a manifestation of the relationship
between Islamic governance and non-Muslim communities under its protection.
Oversimplification
of Conversion Motives: By focusing heavily on economic incentives, the model
potentially oversimplifies the complex reasons why individuals might choose to
convert to Islam. Spiritual convictions are largely sidelined in favor of
financial considerations.
Narrow
Focus on Financial Obligations: The model considers only Jzyh and land tax,
ignoring other financial obligations that Muslims face, such as Zakāt.
This selective focus may present an incomplete picture of the financial
implications of religious affiliation.
Assumption
of Ruler’s Motives: The portrayal of Jzyh primarily as a ruler’s discretionary
tool fundamentally contradicts its nature as a divine mandate. The model’s
framework erroneously suggests that rulers had autonomy in implementing what
are sacred injunctions prescribed by Islamic law.
Limited
Applicability: The model’s narrow focus on Coptic conversions in Egypt presents
significant methodological and conceptual limitations. By deriving general
theories about Islamic expansion and conversion from this specific context, the
model overlooks the diverse historical trajectories of Islamization across
regions, from Persia’s sophisticated administrative traditions to the complex
social structures of South Asia. Moreover, the Egyptian case, with its unique
demographic, institutional, and historical characteristics, cannot adequately
capture the varied ways Islamic principles of governance were implemented
across different societies. This geographical and temporal specificity undermines
the model’s ability to explain broader patterns of Islamic history and risks
promoting an oversimplified understanding of how Islamic principles interacted
with diverse local contexts.
Neglect
of Theological and Spiritual Dimensions: While the model captures certain
observable patterns in taxation and conversion rates, its attempt to quantify
faith through an “identity strength” variable reveals a fundamental
epistemological flaw. In Islam, conversion represents a profound spiritual
transformation emerging from divine guidance (Hidāyat) and recognition of
truth - a sacred process that transcends economic rationalization. The model’s
framework, by prioritizing economic incentives in religious conversion, inverts
the actual relationship between faith and material concerns in Islamic thought.
For the believer, economic decisions and social interactions are subordinate to
and shaped by religious conviction, not vice versa.
The
models’ reductionist methodology cannot capture how faith transforms human consciousness
and behavior, shaping responses to taxation beyond mere utility calculations.
The model’s inability to incorporate the transcendent nature of religious
experience thus limits its explanatory power and risks promoting a distorted
understanding of how faith operates in human society.
Maqāṣid
al-sharīʻah Perspective: Al-Shāṭibī elaborates
in Al-Muwāfaqāt that the poll tax (Jizyah) and land tax (Kharāj) were not merely instruments
of economic extraction or religious conversion, but rather part of a broader
system of social justice and public welfare (Maṣlaḥat).
These taxes served multiple intersecting purposes: protecting non-Muslim
communities’ right to religious freedom while ensuring their contribution to
the public good, establishing social solidarity through wealth redistribution,
and maintaining political stability through equitable fiscal arrangements -
principles that Chapra identifies as central to the Islamic economic doctrine.
The
authors’ interpretation of the empirical patterns, particularly their emphasis
on Arab authorities deliberately operating on the “downward-sloping side of the
Laffer curve” to maximize conversions, fails to acknowledge the sophisticated
jurisprudential principles governing Islamic law. By treating religious
conversion primarily as a binary outcome driven by tax incentives, the analysis
misses what Al-Raysuni identifies as the deeper purpose of Islamic fiscal policy
in fostering a moral economy based on cooperation (Taʻāwun), social
justice (ʻAdālah), and human dignity (Karāmah).
Ahmed argues that the success of these institutions in enabling trade,
providing public goods through the waqf system, and maintaining social
stability for centuries suggests that they were designed not merely to maximize
either revenue or conversions, but to achieve the higher objectives of Sharia
in promoting human flourishing across all dimensions of life.
This more holistic understanding of Islamic economic doctrine, grounded in Maqāṣid
principles, offers what Kamali describes as a richer explanation for both the
origins and persistence of these institutions than the paper’s more mechanistic
theoretical framework.
4. Synthesis and Theoretical Implications
The
application of economic models to Islamic principles and practices reveals
fundamental challenges in using economic methodology to analyze religion. Our
analysis of these influential studies illuminates broader theoretical issues
about the intersection of economic analysis and religious understanding. These
challenges extend beyond technical limitations to reveal deeper epistemological
and methodological concerns.
4.1 The Challenge of Religious Reductionism
Economic
models’ treatment of religion consistently exhibits a reductionist tendency
that transforms complex spiritual practices and beliefs into simplified
economic calculations. While economic factors undoubtedly influence religious
practice and institutions, the reductionist approach risks overlooking the
spiritual, ethical, and cultural dimensions integral to religious experience.
This limitation becomes particularly evident in how economic models handle divine
revelation and spiritual motivation.
For
instance, Carvalho’s analysis of veiling as an economic and identity management
tool, while mathematically sophisticated, neglects the deep spiritual
significance many women attach to the practice. Similarly, Michalopoulos et al.’s
framing of Islamic economic doctrine as a response to geographic inequality
potentially undermines the belief in Divine revelation central to Islamic
faith. As Lawson argues, such simplifying assumptions can divorce theoretical
models from reality, a problem that becomes particularly acute when analyzing
religious beliefs and practices.
4.2 Materialistic Interpretation and
Spiritual Experience
A
fundamental limitation of economic approaches to religion lies in their
inability to comprehend aspects of human spiritual experiences that go beyond
material considerations. The profound sense of divine connection, the
transformative power of faith, and the deep emotional resonance of religious
practice operate on levels that conventional economic variables cannot capture.
When individuals engage in religious practices—whether prostrating in prayer,
fasting during Ramaḍān, or donning the Ḥijāb —they often
experience states of consciousness and spiritual elevation that defy
quantification or rational choice frameworks.
This
materialistic bias manifests differently across studies but consistently
misrepresents the fundamental nature of religion. Saleh and Tirole’s model of
conversion decisions based primarily on tax incentives, for instance, cannot
adequately capture the profound spiritual and social implications of changing
one’s faith.
4.3 The Problem of Historical Context
Economic
analyses of religion often make ahistorical assumptions about religious
practices and doctrines, failing to account for their development and diverse
interpretations over time. This tendency leads to anachronistic interpretations
that project modern economic concepts onto historical religious practices. For
example, Saleh and Tirole’s assumption that historical rulers were primarily
motivated by revenue maximization or conversion rates may misrepresent the
complex religious and political motivations that shaped Islamic governance.
Moreover,
these studies often exhibit selective focus, choosing aspects of religion that
fit their theoretical frameworks while neglecting others. This selective
approach risks drawing overly broad conclusions about Islam from limited cases.
Michalopoulos et al.’s model, based on 7th-century Arabian conditions, for
instance, struggles to explain the persistence and spread of Islamic economic
principles in vastly different geographic and economic contexts. Moreover, Saleh
and Tirole’s model stresses out the Jzyh and uniform land tax, but they
exclude all other relevant financial obligations in the religion.
5. Conclusion
The application of
economic models to Islamic principles and practices presents fundamental
methodological and theoretical challenges that extend beyond technical
limitations to question the very nature of social scientific approaches to religion.
Through our analysis of influential economic studies of Islamic doctrine and practices,
we have identified systematic patterns in how economic frameworks transform religion
into objects of analysis, often at the cost of their essential spiritual
character.
The key limitations
we have identified operate at multiple levels. At the theoretical level,
economic models consistently struggle to incorporate the transcendent
dimensions of religious experience into their analytical frameworks. The
assumption that religious behavior can be fully explained through rational
choice frameworks and utility maximization fundamentally misaligns with Islamic
concepts of divine guidance, spiritual transformation, and absolute moral
truth. Therefore, these models often fail to capture the essence of what makes
these traditions religious. At the methodological level, these models tend to
reduce complex religious beliefs and practices to measurable variables and
economic calculations, which reflects broader limitations in applying social
scientific methodologies to spiritual experiences. This reductionism is not
merely a simplification for analytical convenience but represents a fundamental
mischaracterization of religion.
The historical and
cultural dimensions of religious practice pose additional challenges for
economic analysis. Our case studies demonstrate how economic models often make
ahistorical assumptions that project contemporary economic concepts onto
historical religious practices. This tendency to view historical religious
developments through a modern economic lens risks misunderstanding both the
motivations of historical actors and the nature of religious institutions. These
findings have significant implications for future research at the intersection
of economics and religion. The current application of economic models to
religion requires careful consideration of its limitations and potential
biases. Future research in this field would benefit from more interdisciplinary
approaches that can integrate insights from religious studies, anthropology,
and sociology to provide a more holistic understanding of religion.
Several directions
for future research emerge from our analysis. First, there is a need for new
theoretical frameworks that can better accommodate both economic and spiritual
dimensions of religious practice. Such frameworks might draw on insights from
multiple disciplines while respecting the unique nature of religious
experience. Second, methodological innovations are needed to develop ways of
studying religious beliefs and practices that do not reduce them to purely
economic calculations. Third, future research should pay greater attention to
historical and cultural contexts when applying economic models to religion.
This requires moving beyond simple economic determinism to understand how
religious practices and institutions develop through complex interactions of
spiritual, social, and economic factors. Finally, there is a need for more
nuanced approaches to studying the relationship between economics and religion
that can acknowledge both their interactions and their distinct natures.
The significance of
these findings extends beyond academic discourse. As economic analysis
continues to expand its reach into various domains of human activity,
understanding its limitations and potential biases in religious contexts
becomes increasingly important. This is particularly crucial given the growing
interest in Islamic economics and finance, where the intersection of economic
and religious principles demands careful consideration.
References
I. Arabic:
الغزالي،
أبو حامد
محمد. المصطفى
من علم الأصول.
بيروت: دار
الكتب
العلمية، 1997.
السكران،
إبراهيم. مآلات
الخطاب
المدني.
الرياض: دار
الوعي للنشر
والتوزيع، 2013.
الشاطبي،
إبراهيم بن
موسى.
الموافقات في
أصول الشريعة.
الخبر: دار
ابن عفان، 1997.
غرايبة،
إبراهيم. "الإسلام
والأنسنة..
معارك من أجل
الأنسنة في السياق
الإسلامي". الجزيرة.
3 أكتوبر 2004. استرجع
في 28/10/2024، من
الرابط: https://tinyurl.com/mwuwasv3.
II. English:
Ahmed,
Habib. “Maqasid al-Shari’ah and Islamic Financial Products: A Framework for
Assessment,” ISRA International Journal of Islamic Finance, Vol.
3, No. 1 (2011), pp. 149-160.
Al-Ghazālī,
Abū Ḥāmid Muḥammad. al-Muṣṭafá min
ʻilm al-uṣūl (in Arabic). Beirut: Dar al-Kutub al-'Ilmiyya,
1997.
Al-Raysuni, Ahmad. Imam Al-Shatibi's Theory of the Higher
Objectives and Intents of Islamic Law. London: International
Institute of Islamic Thought, 2005.
Al-Sakrān,
Ibrāhīm. maʼālāt al-khiṭāb
al-madanī (in Arabic). al-Riyāḍ: Dār al-Waʻy
lil-Nashr wa-al-Tawzīʻ, 1435AH - 2013.
Al-Shāṭibī,
Ibrāhīm ibn Mūsá. al-Muwāfaqāt fī uṣūl
al-sharīʻah (in Arabic). Al-Khobar: Dar Ibn Affan, 1997.
Alwin, Duane F., Jacob L. Felson, Edward T.
Walker and Paula A. Tufiş. “Measuring Religious Identities in Surveys,” International
Journal of Public Opinion Quarterly, Vol. 70, No. 4 (2006), pp. 530-564. https://doi.org/10.1093/poq/nfl024
Auda, Jasser, Maqasid Al-Shari’ah
as Philosophy of Islamic Law: A Systems Approach. London: International
Institute of Islamic Thought, 2008.
Azzi, Corry and Ehrenberg, Ronald. “Household Allocation of
Time and Church Attendance,” Journal of Political Economy, Vol. 83, No.
1 (1975), pp. 27-56. https://doi.org/10.1086/260305
Barro,
Robert J. and McCleary, Rachel M. “Religion and Economic Growth Across
Countries,” American Sociological Review, Vol. 68, No. 5 (2003), pp.
760-781. https://doi.org/10.1177/000312240306800505
Berman,
Eli and Laitin, David D. “Religion, Terrorism and Public Goods: Testing the
Club Model,” Journal of Public Economics, Vol. 92, No. 10-11 (2008), pp.
1942-1967.
Bruce,
Steve. “Religion and Rational Choice: A Critique of Economic Explanations of
Religious Behavior,” Sociology of Religion, Vol. 54, No. 2 (1993), pp.
193-205. https://doi.org/10.2307/3712139
Carvalho,
Jean-Paul. “Religious Clubs: The Strategic Role of Religious Identity,” In:
Jean-Paul Carvalho & Sriya Iyer & Jared Rubin (eds.), Advances in
the Economics of Religion, edited by (Cham: Palgrave Macmillan, 2019),
pp.25-41.
–––.
“Sacrifice and Sorting in Clubs,” In Forum for Social Economics.
Routledge, 2020.
–––.
“Veiling,” The Quarterly Journal of Economics, Vol. 128, No. 1 (2013),
pp. 337-370. https://doi.org/10.1093/qje/qjs045
Chapra,
M. Umer. The Future of Economics: An Islamic Perspective, Vol. 21.
(Leicestershire: Kube Publishing Ltd., 2016).
–––.
The Islamic Vision of Development in the Light of Maqasid Al-Shariah. London:
International Institute of Islamic Thought, 2008.
Copson, Andrew. “What is Humanism?” in: Andrew Copson,
A. C. Grayling (eds.), The Wiley Blackwell Handbook of Humanism (New
Jersey: John Wiley & Sons, 2015), p. 1-33.
Dusuki,
Asyraf Wajdi and Bouheraoua, Said. “The Framework of Maqasid al-Shariah and its
Implication for Islamic Finance,” Islam and Civilisational Renewal, Vol.
2, No. 2 (2011), p. 316-336.
Ehrenberg,
Ronald G. “Household Allocation of Time and Religiosity: Replication and
Extension,” Journal of Political Economy, Vol. 85, No. 2 (1977), pp.
415-423. DOI: 10.1086/260573
Ertman, Martha and Williams, Joan C. Rethinking Commodification:
Cases and Readings in Law and Culture. New York: NYU Press, 2005.
Fine,
Ben and Milonakis, Dimitris. From Economics Imperialism to Freakonomics: The
Shifting Boundaries Between Economics and Other Social Sciences (London:
Routledge, 2009).
Finke,
Roger and Iannaccone, Laurence R. “Supply-Side Explanations for Religious
Change.” The Annals of the American Academy of Political and Social Science,
Vol. 527, No. 1 (1993), pp. 27-39. https://doi.org/10.1177/0002716293527001003
Gharāyibah,
Ibrāhīm. al-Islām wālʼnsnh. Maʻārik min ajl
al-ansanah fī al-siyāq al-Islāmī (in Arabic). Al Jazeera,
Date of Access 27 October 2024, https://tinyurl.com/mwuwasv3
Gilboa,
Itzhak., Minardi, Stefania and Wang, Fan. “Schumpeter Lecture 2023: Rationality
and Zero Risk.” Journal of the European Economic Association, Vol. 22, No.
1 (2024), pp. 1-33. https://doi.org/10.1093/jeea/jvad071
Grudin, Robert. “Humanism,” Encyclopedia Britannica, Date of
Access: 1 February 2025, https://www.britannica.com/topic/humanism.
Hallaq,
Wael B. An Introduction to Islamic Law. Cambridge University Press,
2009.
Haneef,
Mohamed Aslam and Furqani, Hafas. “Methodology of Islamic Economics: Overview
of Present State and Future Direction,” International Journal of Economics,
Management and Accounting, Vol. 19, No. 1 (2011). https://doi.org/10.31436/ijema.v19i1.175
Laurence
R., Iannaccone. “A Formal Model of Church and Sect,” American Journal of
Sociology, Vol. 94 (1988), pp. S241-S268.
–––.
“Introduction to the Economics of Religion,” Journal of Economic Literature,
Vol. 36, No. 3 (1998), pp. 1465-1495.
–––.
“Rational Choice: Framework for the Scientific Study of Religion 1,” Rational
Choice Theory and Religion (2016), pp. 25-45.
–––.
“Risk, Rationality, and Religious Portfolios,” Economic Inquiry, Vol.
33, No. 2 (1995b) pp. 285-295. https://doi.org/10.1111/j.1465-7295.1995.tb01863.x
–––.
“Voodoo Economics? Reviewing the Rational Choice Approach to Religion,” Journal
for the Scientific Study of Religion (1995a), pp. 76-88.
Iannaccone,
Laurence R. and Berman, Eli. “Religious Extremism: The Good, the Bad, and the
Deadly,” Public Choice, Vol. 128 (2006), pp. 109-129.
https://doi.org/10.1007/s11127-006-9047-7
Islamic
Corporation for the Development of the Private Sector (ICD), “Refinitiv Islamic
Finance Development Report 2022 Embracing Change” Date of Access: 1 February
2025, https://icd-ps.org/uploads/files/ICD%20Refinitiv%20ifdi-report-20221669878247_1582.pdf
Iyer,
Sriya. “The New Economics of Religion,” Journal of Economic Literature,
Vol. 54, No. 2 (2016), pp. 395-441. https://doi.org/10.1257/jel.54.2.395
Kahf,
Monzer. “Islamic Economics: Notes on Definition and Methodology,” Review of
Islamic Economics (2003), pp. 23-48.
Kamali, Mohammad Hashim. Maqasid
al-Shari'ah Made Simple. London: International Institute of Islamic Thought,
2008.
Khan, M. Fahim. “An Alternative Approach to Analysis of Consumer
Behaviour: Need for Islamic Theory,” Turkish Journal of Islamic Economics,
Vol. 1, No. 1 (2013), pp. 17-42.
Kumar, Vikas. “A Critical Review of Economic Analyses of
Religion,” IGIDR WPS 23 (2008).
Lawson, Tony. Economics and Reality. London:
Routledge, 1997.
McAndrew,
Siobhan and Voas, David. “Measuring Religiosity Using Surveys,” Survey Question
Bank: Topic Overview 4. (Survey Resources Network Question Bank) University of
Surrey, 2011.
Michalopoulos,
Stelios., Naghavi, Alireza and Prarolo, Giovanni. “Islam, Inequality and
Pre-Industrial Comparative Development,” Journal of Development
Economics, Vol. 120 (2016), pp. 86-98. https://doi.org/10.1016/j.jdeveco.2016.01.002
Montgomery,
James D. “A Formalization and Test of the Religious Economies Model,” American
Sociological Review, Vol. 68, no.5 (2003), pp. 782-809.
–––.
“Contemplations on the Economic Approach to Religious Behavior,” The
American Economic Review, Vol. 86, No. 2 (1996), pp. 443-447.
Nasr,
Seyyed Hossein, Traditional Islam in the Modern World. London: Kegan
Paul International, 1987.
Palmer, Daniel E. “Economic Rationality,” Encyclopedia
Britannica, Date of Access: 1 February 2025, https://www.britannica.com/money/economic-rationality.
Said,
Edward W. Orientalism. New York, Pantheon Books, 1978.
Saleh,
Mohamed and Tirole, Jean. Taxing Identity: Theory and Evidence from Early
Islam, Econometrica, Vol. 89, No. 4 (2021), pp. 1881-1919. https://doi.org/10.3982/ECTA17265
Siddiqi, M. Nejatullah. Riba, Bank Interest and the Rationale
of its Prohibition. Jeddah: Islamic Research and Training
Institute, Islamic Development Bank, 2004.
Smith,
Jane Idelman and Yazbeck Haddad, Yvonne. The Islamic Understanding of Death
and Resurrection. Oxford: Oxford University Press, 2002.
Tarakeshwar,
Nalini., Stanton, Jeffrey and Pargament, Kenneth I. “Religion: An Overlooked
Dimension in Cross-Cultural Psychology,” Journal of Cross-Cultural
Psychology, Vol. 34, No. 4 (2003), pp. 377-394. https://doi.org/10.1177/0022022103034004001
Taylor,
Charles. A Secular Age. Cambridge, MA: Belknap Press of Harvard
University Press, 2007.
Woodhead, Linda. “Five Concepts of
Religion,” International Review of Sociology, Vol. 21, No. 1 (2011), pp.
121-143. https://doi.org/10.1080/03906701.2011.544192
Zaman,
Asad. “An Islamic Critique of Neoclassical Economics,” Pakistan Business
Review, Vol. 14, No. 1 (2012), pp. 9-62.
