O, what a tangled Weber we weave with unemployment

Unemployment has higher psychic costs for workers who identify with the Protestant work ethic. Image sourced from www.shutterstock.com

Recently released labour force figures have shown a rise in unemployment figures to 5.8% and, with Treasury’s budget update slating a rise to 6.25% by the end of the financial year, the future doesn’t look bright for many Australians.

Previous studies have shown that such unemployment has high psychic costs - or loss in quality of life and increased stress. However, our recent research illustrates that the impact on individuals and society may be more complex than previously thought, with religion playing a role in relative levels of well-being loss.

Our study, published in July in the Journal of Economic Behaviour and Organization, examined 82 countries, including Australia. It found that the psychic costs of unemployment may be higher for some religious denominations than others, with Protestants suffering the most.

Moreover, the effect of religious differences was even more pronounced at the societal level, with people from predominantly Protestant societies hurting much more than those people from other societies, when they didn’t have a job.

The study classified Australia as a Protestant country, alongside Estonia, Finland, Germany, Latvia, the Netherlands, New Zealand, Norway, South Africa, Zimbabwe, Sweden, Switzerland, Uganda, the UK,and the US.

How does religion affect economic attitudes and outlook?

The question is as relevant now as it was more than a century ago.

At that time, Max Weber pioneered the idea that culture and religious teachings may hold the key to understanding how the Western world developed its capitalist economic system.

Weber, one of the founding fathers of modern sociology, draws attention to the ascetic ethical system propagated in specific sub-denominations of Protestantism, namely Calvinism, Pietism, Methodism and Baptism.

He found that these religious traditions have been instrumental in promoting the idea that worldly activity can be a means for individuals to prove their faith, which eventually evolved into “spirit of capitalism”: the belief that working for a profit is a moral good in itself.

More than a century since Weber’s writing, his thinking on the cultural roots of modern economic institutions appears to have made a comeback in social science.

At the same time, evidence on Weber’s original thesis on a specific Protestant work ethic remains ambiguous and relies on questionable measures of work ethic.

A wholly different approach, overcoming earlier problems, is to examine what makes people (Protestants and non-Protestants) happy and derive a measure of the intrinsic appreciation of work.

Weber and a new approach

This is what we did in our study, where we examined data on almost 150,000 individuals from 82 countries and considered religious variation in the extent to which work makes people happy and unemployment hurts people’s well-being.

We then took Weber’s Protestant work ethic thesis to suggest two possible hypotheses.

The first hypothesis was that unemployment (relative to having a job) affected the well-being of individual Protestants more than the well-being of individuals with other denominations.

This reflects the most common interpretation of the Weber thesis; that Protestant individuals will have a stronger work ethic than individuals that are holding different religious beliefs.

However, it occurred to us that Weber’s argument does not so much focus on individuals and Protestantism in the present, as it does on a Protestant ethic that has evolved into a rational, secular “spirit of capitalism”.

Our second hypothesis therefore emphasised the idea of a work ethic pervading a whole society. It postulated that unemployment (relative to having a job) affects the well-being of people from historically Protestant societies more than it affects the well-being of people from other societies.

The way we work

Both these hypotheses were confirmed in our empirical analysis.

Not having a job is universally bad for people’s happiness, regardless of religious denomination, but it hurts the well-being of Protestants about 40% more, even with several factors such as income and health controlled for.

Religious differences in the psychic costs of unemployment were even more pronounced at the societal level. People from Protestant societies are hurt more than twice as much by not having a job, than those from other societies.

In fact, when testing the effect of individual Protestantism and societal Protestantism simultaneously, the societal-level effect dominated.

More than a century later, we have a clear confirmation of Weber’s original thesis, even in contemporary data.

Beyond providing the most comprehensive evidence on the Weber thesis to date, our study also makes an important methodological contribution.

As interest in the role of culture, socio-economic outcomes and developments increases, we also need to improve methods of measuring differences in cultural values between societies and groups of people.

Our method can be used to measure systematic cross-cultural differences in a range of issues, posing a most welcome contribution to the methodological toolkit of empirical social scientists.