Belief Systems, Religion, and Behavioral Economics: Marketing in Multicultural Environments

Belief Systems, Religion,

and Behavioral Economics

Belief Systems, Religion,

and Behavioral Economics

Marketing in Multicultural Environments

Elizabeth A. Minton and Lynn R. Kahle

Belief Systems, Religion, and Behavioral Economics:

Marketing in Multicultural Environments

Copyright © Business Expert Press, LLC, 2014.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 400 words, without the prior permission of the publisher.

First published in 2014 by

Business Expert Press, LLC

222 East 46th Street, New York, NY 10017

www.businessexpertpress.com

ISBN-13: 978-1-60649-704-3 (paperback)

ISBN-13: 978-1-60649-705-0 (e-book)

Business Expert Press Economics and Public Policy Collection

Cover and interior design by Exeter Premedia Services Private Ltd.,

Chennai, India

First edition: 2014

10 9 8 7 6 5 4 3 2 1

Printed in the United States of America.

We can tell our values by looking at our checkbook stubs.

—Gloria Steinem

Abstract

Religion is a topic that businesses often ignore, in spite of 70% of the world being religious. Whether the silence results from the taboo nature of the topic or the thought that religion is a separate domain from consumption and business, it cannot be denied that it has received scant attention. Many do not realize (or resist) the idea that religion is a key contributor to a consumer’s core values, which then contribute to consumption decisions, voting practices, reaction to pro-social messages and public policy, as well as donating behavior.

The field of behavioral economics discusses how various social and cognitive factors influence economic decisions, which encompass consumer decision making. This field needs to incorporate religion as an influence on economic decision making. To be able to manage a business effectively, to market to consumers of various religious backgrounds properly and effectively, to develop public policy acceptable across religious boundaries, and to interact with other business professionals, an understanding of religion and business is, and will continue to be, especially important in the business world.

Thus, this book provides one of the first comprehensive investigations into the relationship between religion and behavioral economics. We discuss the importance of religion in the field of business along with managerial implications in great detail. The basic premises of the major religious affiliations (Christianity, Judaism, Islam, Hinduism, Buddhism, and Confucianism/Taoism) are reviewed. We bring to life prior research on religion and behavioral economics with an emphasis on how this research can help practitioners to improve business practices.

In this book, we look at how religion relates to consumer behavior from a scientific perspective. We try to observe and understand the consequences of very real beliefs. We critique our efforts from the point of view of epistemology, not hermeneutics. We will leave to others with different training and knowledge the quest for religious Truth, but we respect people who sincerely and honestly search for either scientific truth, religious Truth, or both.

This book is relevant to current managers, anyone involved in marketing, MBA students, and also upper-division undergraduate students. Each of these groups will benefit from a clear understanding of religious groups and the influence of religion on consumer decision making. Readers of this book will learn to create marketing campaigns inclusive of all religious affiliations or directed toward specific religious affiliations, to interact with business associates with different religious beliefs, and to develop public policy or pro-social messages aimed at approval from certain religious groups.

Keywords

religion, religiosity, religious affiliation, belief systems, Christian, Jew, Muslim, Hindu, Buddhist, Confucianist, Taoist, behavioral economics, consumer behavior, decision making, morality, donation behavior, sustainability, holidays

Contents

Preface

Chapter 1    Behavioral Economics and Belief Systems

Chapter 2    Demystifying Belief Systems

Chapter 3    Belief Systems of the Western World & Interpretations for Behavioral Economics

Chapter 4    Belief Systems of the Eastern World & Interpretations for Behavioral Economics

Chapter 5    The Disconnect Between Belief Systems and Behavioral Economics

Chapter 6    Comparing Belief Systems: Influences on Behavioral Economics

Chapter 7    Comparing Belief Systems: Influences on Consumers

Chapter 8    Managerial Implications for Businesses

Chapter 9    Cases

Chapter 10  Conclusion

Appendix

Notes

References

Index

Preface

We are pleased to introduce our book on religion, belief systems, and behavioral economics. Across all fields of business, religion is often seen as a taboo topic. We have found when presenting religion and consumer behavior papers that academic audience members often either protest that religion has no part in business or want to proselytize for their own religious beliefs; however, religion has a definite (and non-proselytizing) place in business and, more specifically, in behavioral economics. We know how critical it is when studying such a controversial topic to take a scientific vantage point – we are not advocating faith but rather scientifically examining how faith influences many different aspects of consumption, consumer-related decision making, and behavioral economics. At the same time, we have respect for people who seek religious Truth, scientific truth, or both.

The target for this book is threefold:

•   First, it’s for businesses that desire to understand target markets more effectively, design better product offerings, and improve their understanding of religious influences on marketing efforts.

•   Second, it’s for classes and students studying culture and behavioral economics, international marketing, or any other course examining the influences of religion, culture, or international markets on business.

•   Third, it’s for academics across a variety of fields (e.g., behavioral economics, marketing, religion) as a thorough review of literature on the topic of religion and behavioral economics providing an insight into gaps in the research that need to be explored further.

The topic for this book emerged from a mutual interest in consumer values. One of the authors (lk) developed the List of Values, which is a measurement instrument for understanding a consumer’s core values. Out of this research tradition, we both asked the question – what determines a consumer’s core values? One part of the answer was ‘religion’. Throughout this book, we discuss how religion pervades society both for people who are religious and people who are not. Additionally, we describe how those that do not believe in a God (i.e., atheists) and those who are uncertain about the existence of God (i.e., agnostics) also carry a belief system that influences behavioral economics. Because of this important relation between belief systems and consumption and the lack of prior research in the area, we decided to write this book. We hope you find the book as interesting to read as we have found researching the topic and writing the book.

We, two marketing scholars, wrote this book for a series in behavioral economics. Marketing has two academic parent disciplines—economics, which believes that people are always rational and behave in their self-interest, and psychology, which believes that people are never rational and frequently behave in an inexplicable manner. Perhaps the topic of religion, more than any other, taunts both parent disciplines—behavioral economics and consumer psychology—because intellectually it disobeys the rules of both. Yet the importance of religion in many people’s daily lives is an empirical fact awaiting explication or punishment for breaking all the rules. Our challenge in this book was to tackle the illusive running back of an idea that is rather impressive in its run across the field. We hope through this discussion to set the stage for further discussion about the bases of both behavioral economics and consumer psychology.

The timing of this book is perhaps in part a result of the emergence of Big Data access and analysis techniques. Religion is highly complex, and many of the attempts to study it have fallen short of optimal potential because of simplistic approaches. With the growth of Big Data, it is now possible to model religion’s effects in a much more complex manner than was previously possible. Thus, the time seems ripe to examine the complexity of religion in relation to behavioral economics.

Of course, the completion of this book could not have been possible without the help of many people. We are immensely thankful to Dr. Norm Metzler, for his detailed and theologically insightful comments on and improvements to our book. We appreciate our many friends from various belief traditions who provided insights into their worlds. We would also like to thank Dr. Philip Romero for his encouragement to write this book as well as many others at Business Expert Press, including Dr. Jeff Edwards, who have helped along the way in the publication process. Of course, we cannot end our list of thanks without giving credit to our spouses, Dr. Debra Eisert and Daniel Minton, who have put in many hours editing our work, being a sounding board for ideas, and being supportive all through the process.

Whether you are a manager, academic, or student, we hope this book will inspire you to think about the relationship between religion and consumption and to integrate this newfound perspective into the work that you do.

CHAPTER 1

Behavioral Economics and Belief Systems

Introduction

Religion is a topic that businesses often ignore, in spite of 70% of the world being religious. Whether the silence results from the taboo nature of the topic or the thought that religion is a separate domain from consumption and business, it cannot be denied that it has received scant attention. Many resist the idea (or do not realize) that religion is a key contributor to a consumer’s core values, which then contribute to consumption decisions, voting practices, reaction to pro-social messages and public policy, as well as donating behavior. All cultures have a concept of God and of spirituality, although definitions and acceptance of those concepts vary.

The field of behavioral economics discusses how various social and cognitive factors influence economic decisions, which encompass consumer decision making. This field needs to incorporate belief systems (a primary one of which is religion) as an influence on economic decision making. To be able to manage a business effectively, to market to consumers of various religious backgrounds, to develop public policy acceptable across religious boundaries, and to interact with other business professionals, an understanding of religion and business is, and will continue to be, especially important in the business world.

Thus, this book provides one of the first comprehensive investigations into the relation between religion and behavioral economics. The chapters of the book explore the importance of religion in the field of business along with managerial implications. The basic premises of the major religious affiliations (Christianity, Judaism, Islam, Hinduism, Buddhism, and Confucianism/Taoism) are reviewed. More specifically, the chapters to follow bring to life prior research on religion and behavioral economics with an emphasis on how this research can help practitioners to improve business practices.

Advances in data collection in our current age of Big Data have led to new avenues for collecting consumer data on religion and belief systems.¹

Consumer data are everywhere today—within social media, on store loyalty cards, in corporate databases. These data provide unique insights into consumer religious profiles that are often lying dormant waiting for businesses to use them to improve marketing practices. A mixture of Big Data and social media (where consumers can self-select into religious groups) are leading to a new age of marketing that is pivotal to the field of behavioral economics.

Behavioral Economics Versus Marketing

The field of behavioral economics dates back to the 1700s.² This field studies how social-cognitive biases influence the economy through market prices, supply and demand, and consumer behavior. Behavioral economics is well known especially for three areas: (1) framing (e.g., an advertisement framed as gaining $50 for purchasing an energy efficient appliance vs. losing $50 for not purchasing the appliance), (2) heuristics (i.e., mental shortcuts humans use to make decisions, such as seeing two options and assuming the more expensive one is higher quality), and (3) market inefficiencies (i.e., incorporating human behavioral explanations for why rational economic models do not always work).

The field of marketing began to takeoff with the beginning of the industrial revolution in the 1800s.³ Marketing extends the field of behavioral economics to focus more on providing value to the consumer in addition to exploring strategies for effective execution of methods for selling products, services, people, or ideas that can be used by companies and policy makers alike. Contemporary marketing is not just about selling products but also about providing value to the consumer and even involves developing public policy to protect consumers from harmful behaviors. Good marketing typically begins by finding out what consumers want before developing products or attempting to sell them profitably. It is much easier to sell something if the potential customer wants it. Thus, behavioral economics examines human behavior in relation to economic changes whereas marketing explores economic and corporate behavior in relation to both economic and non-economic (e.g., satisfaction) changes. In practice the two fields often overlap in topics of interest.

In behavioral economics, scholars use the results of psychological and economic experiments to evaluate the predictive power of core assumptions about the behavior of economic actors. They choose options according to economic theory based on their net benefits, make resource decisions at the margin, or maximize personal utility. The core of economics retains the assumption that individuals are