costlyre
30Nov/100

Is education overtaking spiritualism? $15.5 billion says yes.

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So we expend $220 billion annually to soothe our spirits, a little more than $70 billion of which is in direct contributions to religious organizations; these seem like large numbers, but they’ve been presented within a limited context. It’s worth investigating how our spiritual spending is put to use.

In part it flows into the physical infrastructure of spirituality: the temples, the cathedrals, the apses and spires, that Wizard of Oz- looking-thing that looms over the interstate as you drive into DC.1 For quite some time we (and by we I mean humanity) have been happy to devote significant dollar-volumes (or ducat-volumes) towards constructing structures that might concentrate the attentions of the pious (and perhaps the attentions of the higher powers towards which they're sending their prayers): the ancient Greeks spent the equivalent of $1.5 billion to erect the Parthenon; a whole series of popes dished out $2.2 billion in building St. Peter’s.2

To fast forward to the present day, while Houston’s Lakewood Church, which caters to the largest congregation in America, is certainly no St. Peter’s Basilica (and Joel Osteen is certainly no Pope Innocent X), the congregants have invested a fair amount of money in the place (just north of $80 million between renovations and purchasing the property). And that's just one church (albeit a large one.3 ) But how much money has gone into these facilities in aggregate? Is it possible (or even moral) to put a monetary value on an entire nation's housing stock of worship?

Well, luckily enough for us, the US Bureau of Economic Affairs believes that it is and has been kind enough to aggregate the investment dollars devoted to this spiritual infrastructure and, further, to provide estimates for the replacement value of the religious structures currently in place.4 It turns out that the religious facilities strewn throughout the United States are worth a little less than $300 billion.5 Put another way, for every $60 invested in our domiciles we have a little more than $1 invested in our spiritual centers. To provide another point of comparison, one could imagine that each of the 45 million church-attending households in the US instead owned a $6,000 private chapel.

But is this a lot?

Perhaps it would be helpful to compare to another sort of institution that we have relied upon for our uplift and betterment: the school.

As Bush II ascended to power some believed that it signaled a return to the spiritual in our country, that a Christian nation would again rise and that science and education were being prepped for sacrifice at the altar of religious conviction. And that may well have occurred. But if it did, the sacrificial altar was perhaps located inside a new schoolhouse rather than in a church proper:

The dollar value of the educational buildings in the United States had never exceeded the dollar value of the religious structures until the first year of W’s presidency.

To put some meat on that statement: From the end of World War II until 1967, there was between $1.50 and $1.60 of fixed capital in churches, chapels and cathedrals (and synagogues and temples &c &c) for every dollar in educational facilities. The ratio declined and then stabilized again remaining at 1.4 for much of the ‘70s. Beginning in 1980 fixed investment growth in education began to outpace religious fixed investment and by 1995 for every $1 in educational structures there existed only $1.20 worth of religious cathedrals. By 2001 educational buildings were more valuable than spiritual buildings. And in 2009 for every $0.74 of churches there is a dollar's worth of classrooms.

We are heathens.

Or are we?

It’s not as if church spending has fallen off a cliff; to borrow a statistic from a few paragraphs supra, if every church-attending household has the equivalent of a $6,000 private chapel, then each of the US’s 76 million students only enjoys a $4,900 private classroom.

Moreover, an investigation of the data (pictured) suggests that, rather than any notable decline in religious investment (which averaged $5.9 billion in the 80s, $6.6 billion in the ‘90s and $8.7 billion in the aughts),6 there has simply been faster acceleration in educational investment (which went from $5.2 billion in the ‘80s, to $9.2 billion in the nineties, to $15.5 billion in the naughties).

Only in the past two decades has investment in educational facilities consistently outpaced investment in religious facilities.

There are presumably a number of factors driving these trends, but a few notable possibilities come to mind: baby boomers are giving back to their almae matres (with some anticipated quid pro quo as their teenage sons’ and daughters’ applications come sliding across the admissions officer’s desk); the income gap between those that have been privately educated and/or have graduated from institutions of higher learning and those that have not has widened, and so educational institutions simply have a larger pool of incomes to slurp from than their religious counterparts; the trend toward mega-churches has led to capital efficiencies on the religious side (per parishioner it’s cheaper to build a 50,000 person chapel than a 50 person chapel); new investment in churches has increasingly taken place in exurbs whereas educational investment has concentrated in denser and higher cost areas; &c.

I’m relatively confident that all of the above are contributing factors to this (relatively new) share shift; however, they are also all endemic of a larger and more fundamental driver impacting economic flow: educational facilities increasingly spur more economic productivity than their religious counterparts.7 And the global economy tends to recursively shift resources towards those institutions that will enhance economic productivity (and, conversely, shift marginally fewer resources towards those institutions with diminishing prospects of providing a return) even when the entities involved are not profit-generating institutions; (it’s no coincidence that the best schools also have the largest endowments.)  In short, educational institutions exhibit all of the hallmarks of a growth industry: compounding investment dollars, strong pricing power, and still lots of inefficiencies to attack. While religious institutions -- a sector in consolidation, with recent declines in investment flows, beset by scandal and infighting -- they look to me like the incumbent, perhaps being displaced.

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  1. The DC Chapel []
  2. Prices converted to 2010 USD from Talents and Ducats respectively. []
  3. See pic []
  4. See the fixed asset tables at their site. []
  5. This figure has dropped to $275 billion in 2009 from $299 billion in 2008 not because the buildings wore out very quickly (there was only $5ish billion in depreciation) but because of construction cost deflation (which is to say if you set out to rebuild all of the religious structures in the United States it would only cost you $275 billion to do so in 2009 versus a little under $300 billion in ’08 and a little over $300 billion in ’07). []
  6. Dollar figures, as always, are inflation adjusted. []
  7. I know that this may sound incredibly uncontroversial and so is probably worth exploring on its own merit because it’s actually more knotty than it at first appears; I’ll offer only this as a teaser: consider for a moment the quantity of business deals that have probably been struck, the number of jobs that have been offered, the sheer dollar volume of economic activity that must have and still does occur as spurred by relationships developed in the shared space of organized spirituality; is that volume declining, and why? Separately, one could even argue that business school itself is little more than a sort of church service organized around a wholly separate God. []
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14Nov/100

Admit one: church, $11.50

Sure we Americans do what we can to influence the political process; failing that, however, there are other powers to which we might appeal.

So enough politics (for now). Instead why don’t we take a moment to focus on the soul.

What do we spend on spirituality?

Spiritual spending is up from $1.81 per capita in 1995 to $2.07 today

Some 40% of Americans attend a religious service weekly,1 and despite the proclamations of some hysterics, the share of Americans attending has remained relatively consistent over the past two decades. It’s clear we spend a lot of time on matters of the spirit.

But we also spend a lot of money. $73 billion to be exact.2 This is the revenue that religious organizations generated in 2009.

Okay, so $73 billion sounds like a big number, but what does it mean. Well, if 40% of Americans attend church (or some otherwise affiliated religious franchise) 52 weeks a year then you could think of these houses of god charging $11.50 or so for tickets (though at peak, in 2007, they charged $12.30).

Of course the time that is spent in church is time that might otherwise be spent working (though, yes, one is not strictly allowed to work on the Sabbath anyway). So, in addition to the money spent for our theoretical church-attendance- tickets, what is the opportunity cost of cooping up our labor force in the nation’s chapels and temples each and every sunday?

Well, assuming that the earnings power of church attendees matches that of the general population, ((If you look through the Pew Survey results you’ll see that this is close enough to true that it won’t significantly affect the results), then roughly 50% of church-goers belong to the labor force and could be otherwise earning $18.60 an hour. If the average service lasts 2 hours then we give up $18.60 in wages for every person that prostrates him- or herself before god. This grosses up to an additional $120 billion annually.

In large part this prostrating is ostensibly motivated by the desire to move on to a better place upon stumbling over the tail of our mortal coil. In deference to this desire those left behind spend significant sums to inter our remains and memorialize our passing. Annual spending on funeral and burial services equals $15.7 billion. This works out to $6,350 per passing, down from a peak $8,330 in 2001 (yes, we’re putting our dead to rest more economically now, in part due to a mix-shift towards cremations but also by buying our coffins cheap, from china).

Of course, there are some that worship a different Sunday God, that evangelize for a separate power, and succor their soul in an altogether alternate setting. Theirs is a spirituality enlivened not just by hail marys but also homeruns, made true not by mere miracles but also by multimillionaire megastars. In the US we spend more than $17 billion attending sporting events in worship of our nike-endorsed demigods. To some this might not seem to qualify as spiritual spending, but I’d bet that they have never felt the fevered thrum in Cameron Indoor, the swirling shouts at Fenway, the flooded canyon roar at Michigan Stadium. Yes, exaltation in those settings is as ecstatic if not more than that seen when worshippers burst into song, speak in tongues, faint at the preachers touch.

US per capita spend on spiritual needs

All in, by this account, we spend $220 billion annually on our ephemeral spirits. This works out to $2 per person per day up from $1.80 in 1995. So the next time you ask for a tall latte at a starbucks remember, you could save your money and then, for the same cost, you might just save your soul.

  1. If you believe this survey, though some researchers claim that these results overstate attendance by as much as 2x. []
  2. The IRS reports a number some ~$10 billion lower number than the BEA; for the sake of this discussion and since they have more recent data available, I’ll stick with the BEA for now. []
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12Oct/100

Outspend and extend (your life at $3/hour)

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Of course such lean living almost certainly has an impact on health. If we spend less do we live less?

Put another way, what is the cost of a year of life?

“Priceless”, you say?

Well, these guys,1 who are probably pretty smart, would have you believe that we (and by “we” I mean the American taxpaying public) are willing to pay $129,000 (in dialysis costs) for an additional quality-adjusted year of life.

Seems expensive (or horrifyingly cheap, depending upon your perspective).

But that’s what we’re willing to pay once somebody is already sick; what would an extra dollar in the pocket do for how long we’re likely to live?

By turning to Canada, in which the healthcare is ostensibly free, I’ll derive down to the health-effects of an extra discretionary dollar spent. So somebody in Canada has already followed this line of inquiry.2 It should come as no surprise that the more you earn the longer you live: a top-decile- earning 25 year old male can look forward to a healthy life lasting almost 40% longer than a bottom-decile-earner.

With just a bit of arithmetic (and some sourcing from the Canadian household spending survey) we can convert these earnings into post-tax spending, and see just how important our consumption dollars might be.

Lowest income earners in Canada spend roughly $30 per day3 (seems to be the North American magic number – see prior post). At this level they can expect to live until 62, but for $5 a day more, they could expect to live until 65.

Over the course of a lifetime this works out to a little less than $25,000 per additional year of life, and if you spend more, you get more (though the series suffers from predictably diminishing returns.) You can live 14 additional healthy years at a cost of $100 thousand per.

Lifespan for sale, as low as $3 an hour

Put another way, you can buy 3 additional years of life at less than $3 an hour, the 3 years after that will run at a little more than $4; you’ll pay $7.50 an hour for the next 3 and $14+ for 3 more. By this math if Bill Gates weren’t so foolishly frittering away his net worth on charitable institutions he could expect to live to be 115 years old.

Circling back, what decision are we actually making when giving a patient dialysis at a cost of $129,000 per healthy year lived? Does that make sense when more than half the population can effectively buy additional life-years at less than $65,000 a piece?

(And, of course, it does and it doesn’t. We humans have proven remarkably adept at watching dumb the smoldering flare-sparks, a glass of water at hand, when not three hours later we’ll find ourselves dumping futile bucket after futile bucket into the inferno).

Returning to Mr. Microsoft for a moment, if he were to effectively buy life-years, the final billion dollars spent would net him 25 extra days. A billion instead in the hands of low income earners should net 15.5 million.4 So unless Mr. Gates believes his remaining time on earth to be 600,000x more important than that of the common man, his charitable bent would seem to make a bit more sense.

What does this have to do with how we proles should operate? Well if you’re a 25-year old spending $10,000 per year and looking to get yourself into Guinness, just aim to increase spending by 17% a year (year after year after year). Sure it might be difficult in the twilight of your life (as you spend $70,000 per minute), but it’s certainly a small price to pay to best Jeanne Calment.5

Perhaps more practically, when you’re choosing between the organic banana and the pesticidal alternative, or the car with side-impact airbags versus the used clunker, without, pause a moment to consider that some don’t even have the choice, and remember that for 3 extra bucks you might just net an additional hour on earth.

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  1. Stanford empiric estimate of the value of a life study []
  2. here []
  3. A 2001 datapoint, converting Loonies to USD and inflation-adjusting to 2010 levels []
  4. To say nothing of how far that money could go if properly allocated to strategies that effectively multiply its impact. []
  5. Who was very very old. []
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10Oct/100

$30: the daily cost of life

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What is the cost of living?

It’s a frightening concept when truly considered. “Without [x] you will die.” And [x] is not food, or water, oxygen or air but, instead, a number, an abstraction, a disembodied quantity.

Allow me to embody it.

In the US, people have trouble spending less than $30 per day, even in households that generate less than half of that in wages. 1 And what do they spend it on?

More than half goes towards a place to stay plus the requisite gas-phone-electric; a fiver for transportation; a bit more than that on food. Then between $2 in healthcare, a buck-fifty’s worth of clothes and the same on education there just isn’t that much left.

Cost of life in US

But they could spend smarter! (you may, with great indignation, claim.)

Perhaps, but even those who generate double the income don’t spend that much more: they spend 3 additional dollars on the house and a couple of extra bucks on the car; an additional dollar goes towards a retirement plan.

3,000 pennies.

And the number holds firm through recent history. In 1984, households generating $5 per person per day in income spent $30 per person to get by; households with quadruple the income spent just $32.2

300 dimes.

By this measure almost 30 million US families (1 out of every 4) don’t generate enough income to live. They accumulate debt; they scrounge and beg; they live silently desperately restlessly hungry for another nickel or penny or dime. They need a dollar and a quarter every hour; 2 cents per every person per every minute.

Yes, that ticket to live: its cost is $30 (and it expires at midnight.)

And awful how far we fall short.

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  1. To be precise, households that generate between $8.50 and $17 in income per person per day spend $32.75 per person per day; sourced from the 2008 consumer expenditure survey. []
  2. All dollar figures inflation adjusted. []
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