Rational Choice, Religion, and the Marketplace: Where Does Adam Smith Fit In?

Rational choice theorists of religion have assumed that Adam Smith's Wealth of Nations advocates a free market in religion, which, they argue, leads to increased religious vitality. In fact, while Smith opposed direct government subsidies for religion and argued that a free market was the first-best solution, as a second-best policy he advocated religious regulation, including state-appointed clergy and the reduction of clergy income. Smith's rational choice approach to religion, which springs from his understanding of public goods, externalities and the need for civil peace, and government stability, can still provide direction for social scientific research, but it does not always support a policy of religious free markets.