What are the connections between religion, science and economics?
Economics is considered a social science rather than a natural science due to its dealing with human interaction and its limited ability to offer data from the field that can be repeated or used to test a hypothesis. As a discipline it provides an interesting measuring stick for our spending habits and our investment portfolios, but does it have something to say about us as humans and about religion and science?
For example, behavioral finance, a field of study that proposes psychology-based theories to explain stock market anomalies, relies on scientific findings to show us the characteristics of market participants that systematically influence individual's investment decisions.
Investment strategies have been created to take advantage of the faulty decision making that has been unveiled by behavioral finance theory. Researchers' findings seem to be based on beliefs that many of our biggest money decisions are based on our own personal fears and greed. The repeatability and the disproving of these investment beliefs have been elusive albeit interesting.
Then are the findings that the "highs" experienced by winning traders are similar to the experience of using cocaine and thereby establishing a link between drug use and Wall Street as highlighted in the film "Inside Job," which was about the root causes of the 2008 financial crisis. While the connections seem obvious the facts may not always back up theories.
So if much of economics and markets hold untestable theories and limited facts, why should an organization such as The John Templeton Foundation that backs religion and science scholarship fund research on capitalism? The answer here is one of connections rather than straightforward facts.
For Sir John Templeton, the connection between religion and economics was of great interest and a central theme of his life. For him wealth creation was not an accident of history. He believed that human societies could experience general prosperity, but only when they recognized and established principles of freedom, competition and personal responsibility. Freedom was the indispensable foundation of economic, social and spiritual progress.
The Templeton Foundation as part of its freedom and free enterprise research and its "Big Questions" essays asked after the 2008 financial crisis: "Does the free market corrode moral character?"
Sir John Templeton passed away in 2008, but undoubtedly this would have been a question near and dear to his heart. Growing up in a small town in Tennessee, Templeton supported himself during the Depression and graduated from Yale University in 1934 near the top of his class. He went on to a long and successful career on Wall Street and established a series of mutual funds that bore his name. He was called the "greatest global stock picker of the century."
Ultimately, Templeton focused on the benefits of free and open competition in the marketplace and observed that success in scientific research and many other areas of human endeavor depends on free and open competition. It is this competition that makes progress possible. He wrote about his beliefs saying that when creativity, ingenuity and competitive efforts of individuals are set free, the result can be progress and prosperity beyond anything ever before imagined.
It is with this in mind that Templeton's family carries on his legacy by funding a variety of free market initiatives. Perhaps the most interesting is at Templeton's alma mater Yale, where Ted Malloch (see this month's feature) is studying spiritual capital. The question is simple: Does religion affect the way we spend money and can that type of "capital" be measured in some way?
Malloch insists that there is "spiritual capital" even if it goes unmeasured. Therefore, beyond the question of ethics of stock traders, financial firms and individual investors, Templeton seems to be attempting to use its religion and science platform to focus on positive aspects of capitalism when applied through the lens of religion.
If economic progress can improve society through free and open competition, it seems that a religious viewpoint added to the equation can only be additive, while another layer of academic research can also boost a scientifically informed viewpoint of how the capital controlled by those who consider themselves spiritual can make a long-term difference globally.
Whether spiritual capital can be found and consistently measured is the only missing factor is an intriguing question in what can be considered an emerging view connecting economics with scientific study and revealing a view of religious belief as more than just a label but as a lifestyle that affects our society and economy.