As Ramadan Begins, the Economy Slows but Happiness Increases

June 25, 2014
By Doug Gavel, HKS Communications

This year, June 29th marks the beginning of Ramadan, a 30-day period during which time devout Muslims around the world pray, reflect, and fast from sunrise to sunset. It is a time when religious tradition trumps business considerations. Shopkeepers reduce their hours and workers spend less time on the job and more time in the mosque. This year, in particular, fasting will be particularly intense for Muslims across the Northern Hemisphere, as the month coincides with the long days of summer. A Harvard Kennedy School (HKS) Faculty Research Working Paper co-authored by two HKS faculty members confirms that more intense Ramadan fasting does, in fact, prove to be a drag on the economy, although not on the spirits of its adherents.
Examining data on Ramadan in predominantly Muslim countries dating back to 1950, Associate Professor Filipe Campante and Assistant Professor David Yanagizawa-Drott find that increasing the amounts of time fasting as a result of longer daylight hours, results in statistically significant reductions in economic growth, not just in the month itself but on a year-on-year basis. These reductions seem to be driven mostly by people choosing to work less, or in more flexible occupations, rather than by the direct effects of fasting on worker productivity.
"The quantitative significance of our estimates can be illustrated as follows: if average daily Ramadan fasting were to increase from the actual average of 12 hours to 13 hours – which is about one standard deviation of the variation for the typical Muslim country over the Ramadan cycle – output growth would be lower by about 0.7 percentage point," the authors write.
But while more fasting might make people poorer, the researchers found that it also makes them happier -- a one-hour-per-day increase in the amount of time fasting resulted in a four-percent increase in those people who reported feeling happy, and again not just during the month of Ramadan itself.
"This evidence...helps assuage the apparent contrast between the material cost of the practice and the increased self-reported happiness and life satisfaction that result from it. It suggests that SWB [subjective well being] increased not only due to possible direct benefits of the practices itself (socialization, time devoted to prayer and reflection, time spent with family and friends), but also to a reduced focus on the material and monetary aspects in life and work. In light of such a possibility, it may not be that puzzling that longer Ramadan fasting makes people 'poorer, but happier,'" the authors concluded.
Filipe R. Campante is associate professor of public policy. He is interested in political economy and economic development, with special emphasis on understanding the constraints that are faced by politicians and governments beyond elections and formal "checks and balances". His research has focused on the constraints imposed by the spatial distribution of population, the media, political protest, lobbying, and campaign contributions, and their effects on corruption, governance, polarization, fiscal policy, and political instability.
David Yanagizawa-Drott is an assistant professor of public policy at the Harvard Kennedy School. His research interests include economic development and political economy, with special focus on civil conflict, health, information and mass media.

Filipe R. Campante, associate professor of public policy

Filipe R. Campante, associate professor of public policy
Photo Credit: Martha Stewart

"It suggests that SWB [subjective well being] increased not only due to possible direct benefits of the practices itself (socialization, time devoted to prayer and reflection, time spent with family and friends), but also to a reduced focus on the material and monetary aspects in life and work," write the authors.

David Yanagizawa-Drott, assistant professor of public policy

David Yanagizawa-Drott, assistant professor of public policy

Photo Credit: Martha Stewart

 


John F. Kennedy School of Government 79 John F. Kennedy Street
Cambridge, MA 02138
617-495-1100 Get Directions Visit Contact Page