Religious belief in divine sanctions lowers transaction costs in long-distance trade.
Evidence
The fact that Islam was also a religion and not merely a set of secular institutions further reduced the transaction costs of exchange. Islam was a powerful ideology with built-in sanctions which contributed to considerable self-enforcement of contracts. True believers had a non-material interest in holding to the terms of contracts even if the opportunity presented itself to shirk. All of this resulted in lower transaction costs associated with doing business among fellow Muslims, despite the enormous transportation and information costs involved, given the incredibly long distances and cultural barriers to be traversed across the Sahara and the rest of the continent. — Norenzayan, Ara, Big gods - how religion transformed…, 203
Categorization
Category: Causal Relationships
- XREF: Core evidence for the reader’s Big God thesis: internalized divine surveillance substitutes for costly external enforcement, sustaining cooperation where state verification is impossible.
- DEFINE: Names the mechanism by which belief acts as ‘built-in sanctions’ — self-enforcement of contracts via non-material motives.
Related
- Religious belief self-enforces contracts better than secular institutions do (similarity 0.93)
- Big God belief plus costly displays boosted Islamic trade success in Africa (similarity 0.83)
- Self-enforcing contracts in religious trade networks lower transaction costs. (similarity 0.83)
- Costly Islamic displays enabled trade and credit trust in Africa (similarity 0.82)
- Long-distance trade required religious solidarity and watchful gods to sustain trust (similarity 0.80)
- Islamic conversion in Africa spread via the economic trust its institutions enabled. (similarity 0.80)