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. []
Filed under: life No Comments
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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3Nov/102

$50,000 for a senator’s vote? Aye.

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But putting a politician in office is actually a rather diffuse way to influence policy. Sure, supporters spent $1.4 million for every winning congressman, $8.1 million for every winning senator and three quarters of a billion for a winning president, but wouldn’t it be more effective just to try and spend for the policies that actually affect us, or the things that we care about?

It seems that many have come to that conclusion.

$1.8 billion was spent on lobbying in 1999; by 2009 that number had almost doubled.1 Per congressperson, that works out to $3.5 million lobbying dollars in 1998 and $6.5 in 2009.

$ spent lobbying have almost doubled since 1999

To distill it even further, since 1999 the senate has averaged 1,200 hours a year in session and managed to record a vote every 3.5 hours; so at the current run rate you could imagine lobbying interests paying a little over $50,000 to every senator for every vote cast (assuming that lobbying dollars are equally allocated between the senate and the house).2

What does this all mean? Like anything else, our government can be bought and sold. We sell our votes at a little more than $20 a pop and our representatives sell theirs at 5,000x more. The decisions made by government are monumental but often arbitrary, and the well-placed dollar can make a magnificent difference.

Or can it?

In contrast to much (though not all) of the money raised by political candidates, I suspect that lobbying dollars are allocated dispassionately and supported by an expectation of earning a return. If a business decides to spend money on a lobbyist it is likely doing so because it hopes to influence a piece of legislation that will impact its future profit-opportunity. Assuming that the lobbyists aim to deliver a 20% return on each lobbying dollar invested (and succeed at doing so, at least on average), then the value delivered by the lobbying community to its client-base has grown from just over $2 billion in the late ‘90s to more than $4 billion in 2009.

4 thousand million dollars: not to be sneezed at; though when seated in the context of a $3.5 trillion dollar federal budget the number actually seems relatively slight.

Could it be that our government is not nearly as vulnerable to a parasitic lobbying class as the doomsayers would have us believe? If $3.5 trillion really were up for grabs each year and lobbyists truly were effective at grabbing it, wouldn’t businesses eagerly go to economic war for those funds?3

Instead businesses are spending dollars equivalent to only 1/1000th of the amount that may be amenable to the lobbyists’ sway. Though realistically, the entire federal government's budget isn't up for grabs each year, so perhaps it's more appropriate to focus on the appropriated federal budget at $1.2 trillion in 2009 (and $1.4 trillion in 2010).4 Moreover, businesses are actually aiming to generate a profit-return on their investment, so presuming their lobbying efforts help them to win business from the government, that won business would have to generate earnings (rather that revenue) at a comfortable excess to the lobbying dollars spent.

Take URS, a government construction contractor. Its federal segment generates a margin (before interest, taxes and depreciation) of roughly 6%. If this were representative then it would imply that the $1.2 trillion in appropriated government spending represents a $70 billion earnings-opportunity for businesses. If that were truly the profit available for influencing government businesses should be willing to spend $60 billion or so to win it. Conversely, a $3.5 billion lobbying spend suggests that a little more than 5% of this opportunity is actually open to sway.

So while the money spent on lobbying is gross (and crass and disheartening) it helps to keep things in perspective: while we spent $3.5 billion lobbying political representatives in 2009 (out of $60 billion that one might expect), the Italian economy lost $60 billion to government corruption the prior year (on a $1 trillion dollar government budget).

So while our representatives’ motives may at times seem misbegotten, at least the rules in place seem, in aggregate, to effectively constrain their appetite. There are only so many steak dinners that can be consumed in one week after all (even if, given the lobbying spend pro-rated over the course of a year, each of those dinners do seem to run at a hefty $18,000 per), and certainly it’s better to see politicians pack on the pounds than pocket banknotes by the paper-bagful.

In sum, though we sink money into influencing government, into electing politicians and into affecting their decisions, the size at which we do so turns out to be slight relative to the apparent opportunity.

Chalk one W up for transparent democracy

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  1. All dollar figures are inflation adjusted to 2009. As per the prior post, lobbying spending data comes from opensecrets.org []
  2. Actually dividing 2009 lobbying dollars per senator by votes taken, adjusted for absenteeism, would net a figure of $44,000 per vote due to the above average level of activity (despite which, congress passed fewer laws in 2009 than in any year since at least 1996). []
  3. NB: yes []
  4. Appropriated spending is in contrast to mandatory programs such as social security, medicare and Medicaid. []
Filed under: power 2 Comments