In this paper we argue that religion and welfare state spending are substitute mecha- nisms that insure individuals against adverse life events. As a result, individuals who are religious will prefer lower levels of social insurance provision than will individuals who are secular, and countries that are more religious on average will have lower levels of welfare state spending. In formalizing our argument we also suggest that if benefits fromreligionaresubjecttoaanetworkexternality(Iderivegreaterpleasurefrom religion when others are also religious), it is possible for countries that are similar in terms of underlying conditions to exhibit multiple equilibria. In one equilibrium high religiosity will coexist with low levels of social insurance, while in.
