A Theory of the Islamic Revival

There has been a dramatic surge in Islamic participation and values since the 1970s.  We propose a theory of the contemporary Islamic revival based upon two forms of relative deprivation - envy and unfulfilled aspirations.  To analyze these motivations, a behavioral model of religion is developed in which agents have reference-dependent preferences.  We demonstrate that raised aspirations, low social mobility, high income inequality and poverty are intimately related, not separate causes of a religious revival.  As such, the origins of the Islamic revival are traced to a combination of two developments: (1) a growth reversal which raised aspirations and led subsequently to a decline in social mobility which left aspirations unfulfilled among the educated middle class, (2) increasing income inequality impoverishment of the lower-middle class.  The sexual revolution in the West and rapid urbanization in Muslim societies intensified this process of religious revival.