Why Churches Need Free-riders: Religious Capital Formation and Religious Group Survival

According to existing theory, religion thrives when groups overcome the free-rider problem in the production of religious goods. This paper explains, however, that allowing some free-riding is necessary in a dynamic setting. If an individual only contributes when she has high religious capital, and if capital only forms after exposure to the religious good, then a church must allow her to temporarily free-ride in order to turn her into a future contributor. Free-riders comprise a risky but necessary investment by the church. Strict churches screen out riskier investments yet still allow some free-riding. This explanation yields predictions consistent with the empirical evidence.