In this paper we study the effect of religiosity on the political choices over redistribution and over the legal restrictions on personal liberties. Religious teachings generally restrict individual behavior on issues such as consumption of some goods, sexual orientation, divorce, abortion, gay marriage, contraception and so on. We assume that the more religious an individual is, (i) the less he enjoys the use of liberties prohibited by his religion; and (ii) the higher the negative externality experienced when others in society practice those liberties beyond what he deems adequate. The first assumption implies that, when the law allows for the use of liberties, secular individuals have a higher incentive to work than religious ones. As a result, the political choice of legal restrictions on liberties has an impact on income inequality. The second implies that religious individuals may prefer to repress liberties in society. As repression of liberties reduces income inequality, poor religious individuals may still prefer low taxes compared with richer and less religious ones. We also analyze the choice of redistribution and the legal cap on liberties as the majoritarian outcome in a citizen-candidate model. We obtain that when the majority of the population is religious and the religious cleavage in society is large, high intolerance due to negative externalities leads to a political outcome consisting of repression of liberties and relatively low income taxes.

Joan Esteban and Laura Mayoral gratefully acknowledge financial support ´ from the Spanish Ministry of Economy and Competitiveness Grant, through the Severo Ochoa Programme for Centres of Excellence in RD (SEV-2015-0563) and grant number ECO2015 − 66883−P, Generalitat de Catalunya project number 2017SGR1359, and the National Science Foundation grant SES-1629370

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