Uniter or Divider? Religion and Social Cooperation: Evidence from Indonesia

Abstract

This study investigates how religion influences particularized and generalized trust as well as inter-group discrimination and tolerance in contemporary Indonesia. I combine the individual-level data of the latest round of the Indonesian Family Life Survey with the national census microdata and other nationally representative datasets to examine two sources of variation through which religion may influence these attitudes: individual religiosity and the community’s religious composition. Religiosity is positively associated with particularized trust and in-group preference, and negatively with religious tolerance. The strengths of the associations between measures of in-group preference (including political preference) and individual religiosity are much stronger than those from gender, education, or per-capita expenditure; they are also strongest among Muslims, the dominant majority in Indonesia. These associations are robust to various identification strategies. Using selection on observables to benchmark the potential bias from selection on unobservables, I find that the selection on unobservables needs to be multiple times that on observables to explain away these results. Meanwhile, consistent with previous empirical studies in economics and political science in the United States and other countries, I find in Indonesia that individuals are more cooperative and trusting of their community members in more religiously homogeneous communities. At the same time – and in support of the optimal contact hypothesis of Allport (1954) – individuals in more homogeneous communities exhibit more in-group trust and are less tolerant of members of the religious out-groups. I also find that the inclusion of segregation measures can substantially affect the size of the diversity coefficients. Conditional on diversity, the segregation coefficients are significant and their signs are opposite those of religious diversity for some of the outcomes.