For the second time this week, there has been a terror attack in Israel. The most recent was the stabbing of two orthodox Jews in Jerusalem by a man associated with Islam. Based on data from the Israeli foreign ministry, 2016 was a particularly bad year for terrorism in Israel. There was a total of 122 attacks, the most since 2002, when there was a total of 135 attacks. Laurence R. Iannaccone’s work on understanding the economics of religion and extremism is particularly relevant to understanding the formation of extremist religions and recent terrorist occurrences. Iannaccone’s analysis of the economics of religion was correct, and current terrorism in Israel and elsewhere confirm many of his theories.

Laurence R. Iannaccone, a University of Chicago-educated professor currently teaching at Chapman University in California, published “Extremism and the Economics of Religion” in 2012. The paper adds institutional economic theory to religious institutions in hopes of understanding power structures, incentives, and motivations for entry and membership in different religious organizations. Iannaccone presents three special features of religious markets: 1) they’re naturally competitive, 2) there’s a wide range of “products”, and 3) they must address problems of information and uncertainty. However, these characteristics can be distorted by government policy targeting different groups either implicitly or explicitly.

Laurence R. Iannaccone hypothesized that when the government restricts religious rights from certain groups, the marginal benefits of a suppressed group radicalizing to eliminate free riders and lower costs rises. He notes, “Genuinely violent groups tend to arise only when civil government has suppressed religious freedom, supporting some over others. The potential for violence is further increased where corruption and autocracy impede the function of civil society by limiting access to public goods, suppressing basic liberties, and thwarting economic opportunities.” Although religion isn’t inherently violent as economist William Cavanaugh notes, if any group is restricted from economic opportunities in their society, the incentives for trying to improve conditions through many scenarios rise.

Currently, there is oppression of Islamic groups native to Palestinian areas in the current state of Israel. It is to be noted that this is a very complex issue with many biases and charged opinions, so facts may be distorted and twisted towards different arguments. One current issue is land rights in the West Bank, an area which is hotly debated between Jewish and Islamic settlements. In response to the state of Israel arguably infringing on property rights of Islamic settlers, there have been widespread protest and extremist terror attacks. Following Iannaccone’s framework, an impediment of property rights of a certain group has increased the incentives for violence. Since one of their basic liberties have been suppressed, there is a higher potential for violence as the marginal benefit of violent behavior rises. If Israel could somehow coexist with Palestine without increasing incentives for violent behavior, a competitive market could re-emerge. This would force radical religions to refrain from violence in fear of alienating members who would have more options in a competitive religious market.

In general, decision makers could discourage violence by understanding Iannaccone’s three features of religious markets and implementing concurrent policy. In his paper, he suggests that religious freedom is the best defense against potential violence. Political scientist Daniel Philpott notes there is a positive link between authoritarian regimes and where violent groups originate. In trying to prevent attacks like the recent ones in London, Russia, and Israel, governments need to allow religious freedom in democratic societies and disincentive violence like Iannaccone hypothesized.

Iannaccone’s Economics of Religion