The analysis of the impact of economic reforms on religious and non-religious individuals is undertaken for three different dependent variables, namely life satisfaction, satisfaction with the economic situation in one’s own country, and satisfaction with the political situation in one’s own country. The results are summarized in Tables 3 to 5.4 The effects of several economic reforms are studied. These reforms are distinguished according to the EBRD classification and include privatization of large and small enterprises, restructuring, price and trade liberalizations, reforms in competition policy, banking, security markets, and infrastructure.
In Tables 3 to 5, the direct and indirect effects of reforms are presented.
The direct effect is the impact of a particular indicator of economic reform on the individual life satisfaction, satisfaction with the economic situation, or 4 Detailed results are presented by Popova (2010).
satisfaction with the political situation. This effect represents the impact on an average individual. The indirect effect implies the impact of a particular reform on an average religious individual. For instance, in Table 3, the direct effect of a large-scale privatization reform is negative on the average individual, while the indirect effect of this reform on religious individuals is positive. This means that although large-scale privatization is related to life satisfaction negatively, this effect for religious individuals is partially mitigated by their religiosity. A similar effect is observed for competition policy reform and infrastructure reform. In the economic literature, this phenomenon is defined as »the insurance effect of religiosity« (see Clark and Lelkes, 2006 and 2009; Dehejia et al., 2007; Popova, 2010 and 2014).
The insurance effect of religiosity may be related to different perceptions of economic reforms by religious individuals. On the one hand, since religious individuals have norms and values that are different from that of non-religious individuals, they are likely to be affected by economic reforms differently.
On the other hand, due to a generally greater propensity to believe, religious people may have a greater confidence in the success of economic reforms than non-religious individuals.
As seen from Table 3, price and trade liberalizations, banking and security market reforms do not affect life satisfaction. Enterprise restructuring, banking and security markets reforms also do not have effects on satisfaction with the economic and political situation (see Tables 4 and 5).
Additionally, as seen from Tables 3 to 5, religiosity has a positive effect on all three specifications (life satisfaction, satisfaction with economic situation, and satisfaction with political situation). That is, religious individuals are on average more satisfied with their life and with the economic and political situation of their country than non-religious individuals.
Table 3. Direct and indirect effects of economic reforms on life satisfaction.
Direct effects Indirect effects
Religiosity +
Large scale privatization - Religiosity*Large scale privatization + Small scale privatization + Religiosity*Small scale privatization -Enterprise restructuring + Religiosity*Enterprise restructuring -Price liberalization no Religiosity*Price liberalization No Trade liberalization no Religiosity*Trade liberalization No Competition policy reform - Religiosity*Competition policy reform +
Banking reform no Religiosity*Banking reform No
Securities markets reform no Religiosity*Securities markets reform No Overall infrastructure reform - Religiosity*Overall infrastructure reform + Source: own calculations, Popova (2010). Notes: +/-/no correspond to a positive/
negative/no statistically significant effect found in the econometric model.
Table 4. Direct and indirect effects of economic reforms on satisfaction with economic situation.
Direct effects Indirect effects
Religiosity +
Large scale privatization - Religiosity*Large scale privatization No Small scale privatization - Religiosity*Small scale privatization + Enterprise restructuring no Religiosity*Enterprise restructuring No Price liberalization + Religiosity*Price liberalization No Trade liberalization no Religiosity*Trade liberalization -Competition policy reform + Religiosity*Competition policy reform
-Banking reform no Religiosity*Banking reform No
Securities markets reform no Religiosity*Securities markets reform No Overall infrastructure reform + Religiosity*Overall infrastructure reform -Source: own calculations, Popova (2010). Notes: +/-/no correspond to a positive/
negative/no statistically significant effect found in the econometric model.
Table 5. Direct and indirect effects of economic reforms on satisfaction with political situation.
Direct effects Indirect effects
Religiosity +
Large scale privatization - Religiosity*Large scale privatization No Small scale privatization no Religiosity*Small scale privatization + Enterprise restructuring no Religiosity*Enterprise restructuring No Price liberalization + Religiosity*Price liberalization -Trade liberalization - Religiosity*Trade liberalization No Competition policy reform no Religiosity*Competition policy reform
-Banking reform no Religiosity*Banking reform No
Securities markets reform no Religiosity*Securities markets reform No Overall infrastructure reform no Religiosity*Overall infrastructure reform No Source: own calculations, Popova (2010). Notes: +/-/no correspond to a positive/
negative/no statistically significant effect found in the econometric model.
Interestingly, the different perception of economic reforms by religious indivi-duals is observed not only in cases of negative direct effects, but also in cases of positive direct effects of reforms. That is, if the direct effect of a reform is positive, the satisfaction of religious people increases less than that of non-re-ligious people. For instance, such effects are observed in cases of small-scale privatization and life satisfaction. It means that religiosity reduces the effect of reforms irrespectively of the direction of this effect.
Conclusion
Although transition economies had similar reforms, their economic perfor-mance, average levels of life satisfaction, and the speed of reforms’ implemen-tation differ from country to country. Based on the results of Popova (2010),
this paper suggests that religiosity helps to mitigate the potential negative effects of economic reforms. It implies that the speed of implementation and the sequencing of economic reforms may differ in religious and non-reli-gious communities.
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