The Impact of Economic Narratives on Household Debt: Evidence from Religious Sermons
Abstract
We investigate whether economic narratives in sermons influence individuals' financial decisions. Leveraging geographic variation in membership density of The Church of Jesus Christ of Latter-day Saints, we examine whether regions with more Church members exhibit relatively less indebtedness when Church leaders speak about debt avoidance in worldwide broadcasts. We show that the household debt-to-income ratio is relatively lower in regions with more Church members during years with debt-avoidance sermons. Our models suggest that this effect is economically meaningful, and several additional analyses corroborate our conclusions. Overall, our findings emphasize the importance of narratives originating beyond the usual setting of capital markets to better understand how individuals make financial decisions.