Evangelicals: Preventing and Causing the Housing Bubble

The International Monetary Fund has published some of the most peculiar econometric research in recent history in Irrational Exuberance in the US Housing Market: Were Evangelicals Left Behind? In it, Christopher Crowe associates the financial behavior of Evangelical Protestant Christians with more stable US markets during the housing bubble. It is well known that the housing bubble was concentrated in some metropolitan areas and largely missed others, such as Dallas-Fort Worth, Atlanta, Houston, Indianapolis and many others, most of them with stronger underlying demand than in the metropolitan areas with huge house price increases. Crowe's research raises the possibility that Evangelicals kept house prices down by not speculating, due to their religious beliefs.

Evangelicals generally believe in missionary and conversion activities and tend to hold to beliefs that were largely liberalized in large portions, but not universally in the "mainstream" Protestant churches (such as Episcopal, United Church of Christ, Lutheran, Presbyterian, Methodist, Baptist and Disciples of Christ churches) during the first half of the 20th century. In recent decades, Evangelical churches have grown strongly, Evangelical membership is now 50% greater than that of "mainstream" Protestantism (even with its Evangelical remnants), which has been relegated to "mainstream" in name only.

The Crowe thesis is generally that Evangelicals, allegedly with an "intense" belief in "end times" theology (such as the "imminent" return or the "second coming" of Jesus Christ) were less inclined to speculate in housing, which kept house prices from rising strongly in metropolitan areas with larger concentrations of Evangelicals.

There are some rather substantial difficulties with the thesis.

The first problem is relates to speculation. Rising prices are needed for there to be any incentive to speculate. If, for example, the numerous Evangelicals in Dallas-Fort Worth had undertaken a furious speculative frenzy, prices would not have gone up, instead more houses would have been built. This is because the liberal land use regime in Dallas-Fort Worth permits housing to be built in response to demand and nullifies any potential for speculative gain. Evangelicals, of course, like Catholics, Mainstream Protestants, Jews and Atheists are not stupid and were no more inclined to speculate on housing in the plentiful Dallas-Fort Worth market than they would have been climb over one another to offer higher prices for sand on the beach.

Another difficulty is that Crowe's characterization of Evangelical beliefs is a caricature. In fact, the nation's 40 million Evangelicals, including 15 million Southern Baptists more than 2 million Missouri Synod Lutherans, more than 1 million members of the African Methodist Episcopal Zion Church, non-denominational megachurch members and others behave similarly to other Americans in the economic sphere. Crowe hypothesizes that "that a belief in the end times reduces incentives to save simply because agents put a lower expectation on the future being realized." It would have been equally reliable to conjecture on the subsurface geology of an undiscovered planet.

Evangelicals like nice houses. They like nice cars. They like their children to be well clothed and to go to good schools. They do not refuse raises offered by their bosses because they expect shortly to be caught up into heaven like the prophet Elijah. True, some "end times" Christians have sold their property and trekked to mountaintops or otherwise awaited dates wrongly prophesied by their leaders. It happened in 1844 and in 1914, but these were not Evangelicals.

While Crowe’s research suggests an Evangelical stabilizing effect on housing markets, an opposite, but no less improbable thesis was advanced in an Atlantic Monthly article entitled "Did Christianity Cause the Housing Crash?" This article suggests that the "prosperity" gospel preached in some Evangelical churches led parishioners to take on obligations they could not afford, leading to the bursting of the bubble, though it is mercifully devoid of spurious regressions. Author Hanna Rosin names names, such as Joel Osteen of Houston's Lakewood Church and Rick Warren, whose Saddleback Church in Southern California hosted President Obama as a candidate. It would not be surprising if a future article in The Atlantic pontificated about abandoned suburban megachurches.

One can only wonder what the other nearly 90 percent of Americans were doing while Evangelicals were simultaneously causing and preventing the housing bubble.

Wendell Cox a contributing editor of newgeography.com is the son of an Evangelical clergyman (Pentecostal), became Presbyterian and later an Episcopalian.

Photo: Hollywood Presbyterian Church: An Evangelical Church in a Mainstream Protestant Denomination (by the author).

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Christianity, progress, and housing bubbles

Media like the "Atlantic" will spin everything they possibly can, against fundamentalist Christianity. One of the main obstacles to getting at the real cause of these housing bubbles, is that the "liberal" media is too heavily invested in the "rampant deregulation and free markets did it" narrative, to honestly investigate the role of over-regulation in any area. Paul Krugman is probably the most dishonourable liberal of the lot, because he "got it" a long time ago about "flatland" and "the zoned zone", but has not bothered to pursue this finding to its logical conclusion. Far better to "use a crisis" to enact broad reforms of the whole system - except, of course, the one that your liberal allies were responsible for that was the REAL problem all along.

Back to "The Atlantic"; the kind of "preserve the environment for its own sake" mentality that is a justification for urban growth boundaries, is itself a religious, post-christian, reversion to paganism. "Christianity" is widely held by liberals, to have been an obstruction to human progress. Actually, there is a strong correlation between the presence of effective Christianity everywhere it is to be found, and human progress. Pre-christian paganism and even the Aristotlean scientific framework, were obstructions to progress that were swept away by Christianity. Galileo, Newton, Kepler, et al, would wish us to regard them in this light - they would be repelled by any suggestion that they were the spiritual ancestors of Richard Dawkins.

The post-christian world is reverting to obstructionism of progress, similar to the pre-christian world. Environmentalism and political correctness are major obstructions to progress and to science itself. Look at "Climate Science".

The Christopher Crowe - IMF study is almost certainly right about the CORRELATION, but finds all the wrong reasons to explain it. Evangelicals are also strongly correlated with low-regulation politics per se. Evangelicals also regard the environment as God's provenance, and would intuitively regard urban growth boundaries as the nonsense that they are. Furthermore, evangelicals would be the first to migrate from unaffordable housing areas, to affordable ones.

Lastly, Wendell says:

".....Evangelicals, of course, like Catholics, Mainstream Protestants, Jews and Atheists are not stupid....."

An interesting finding in this context, is buried in the recent study "Economic Enlightenment in Relation to College-going, Ideology, and other variables" by Zeljka Buturovic and Daniel B. Klein. The primary finding of this study is that people who self-identify with leftwing political ideology, have a very poor grasp of basic economic principles and were unable to correctly answer questions like "Restricting housing development will tend to drive up the price of housing; true or false"? But there are numerous other breakdowns of the statistics; one that is relevant here, is that among "religious groups", it is atheists AND Protestant "fundamentalists"/"evangelicals" who stand out as having the best grasp of basic economics. (Roman Catholics, however, showed up extremely poorly. Women also showed up more poorly than men, on average).

First of all, this article

First of all, this article was ridiculous. I fail to see any connection between evangelical Christians and housing bubbles, or the lack thereof. The cities mentioned are less costly due to numerous economic and socioeconomic factors, none of which has to do with religion.

But moving on, I see that you- like quite a few of the conservative folks I've met- tend to out a lot of blame on the "Liberal" media. Its as if they think they're amongst the informed minority who know the "real" truth. If that be the case then I only ask that you look at where a huge amount of Americans get their news from: FOX, and of course the untold zillion AM radio conservative talk shows. Most of these talk shows are just that- talk. But people listen to these shows attentively and believe every single word their hosts say. About 99% of the content is purely opinionated fluff and misinformation. They are successful merely because the content is carefully crafted to build on their listener's pre-existing bias. I'm certainly no fan of so-called liberal media either. But conservative media is very much alive and well and to some extent has a firmer grasp on its audience.