Sermons with Stories of Debt Can Help Churchgoers Stay Frugal

In 2006, a religious leader named Thomas Monson delivered a sermon to members of the Church of Jesus Christ of Latter-day Saints. In part of his speech, Monson chose to depart from standard topics such as scripture, repentance, or service to fellow humans. He wanted to talk about debt.

“My brothers and sisters, avoid the philosophy that yesterday’s luxuries have become today’s necessities,” Monson advised. He warned the audience about borrowers who became unable to repay large loans when they got sick, lost their jobs, or suffered setbacks due to natural disasters. In these situations, “our debt becomes as a Damocles sword hanging over our heads and threatening to destroy us,” he said. “I urge you to live within your means.”

Did this financial advice make a difference? Or did Latter-day Saint members tune out the warnings and go about their household affairs as usual afterward?

A new study co-authored by Thomas Steffen, an associate professor of accounting at Yale SOM, suggests that these types of narratives in religious sermons do affect people’s economic decisions. Steffen, along with Yale SOM PhD student Brett Campbell and Mani Sethuraman of Cornell University, examined two decades of sermons by Latter-day Saint leaders. The team found that in the years that debt-related sermons were delivered, areas with more church members tended to have a lower average debt-to-income ratio than areas with fewer members.

Many of the debt sermons were given in the years leading up to the 2007-09 financial crisis, and may have helped Latter-day Saint members avoid taking on excessive mortgages. “These economic narratives are important,” Steffen says. “They do have the potential to make a meaningful impact on individuals’ economic decisions.”

Steffen was inspired to pursue this question after reading his Yale colleague Robert Shiller’s book Narrative Economics: How Stories Go Viral and Drive Major Economic Events. Shiller has argued that people’s financial decisions are swayed by narratives that spread through the news, popular culture, or word of mouth.

For example, during the housing bubble that preceded the financial crisis, people might have heard predictions that house prices would keep rising and that homeowners who bought a second or even third property were set to make a fortune. Or more recently, they might have read about someone buying a new cryptocurrency and becoming a millionaire.

Economists are used to working with less squishy metrics, such as unemployment rates or wages, to explain households’ financial choices. But it makes sense that the stories people discuss with friends, family, neighbors, and coworkers could play a role in their decisions too. “It’s an intuitive idea,” Steffen says.

One source of narratives mentioned in Shiller’s book was religious sermons. Steffen, who is a member of the Church of Jesus Christ of Latter-day Saints, reflected on the sermons he had heard during the church’s semiannual general conferences. During these conferences, global church leaders deliver a few dozen sermons that are broadcast to all members worldwide. Typical sermons focus on Christian topics like faith, scripture, and salvation, but leaders sometimes also discuss more pragmatic concerns, such as civic duties, education, health, and finances.

It seemed plausible that these sermons might influence church members’ behavior, in part because members are encouraged to study and reflect on the sermons after each conference. For example, they might discuss a sermon in a group, or a leader of a local congregation might ask one member to summarize a particular sermon from general conference and share their thoughts about it with their fellow churchgoers.

Steffen was familiar with the church’s practice of providing online access to transcripts of prior general conference sermons. Based on the transcripts, the researchers identified the years in which at least one sermon about debt was given from 2001 to 2020. They obtained data on the average household debt-to-income ratio, as well as the percentage of the population belonging to the Church of Jesus Christ of Latter-day Saints, in each county or metropolitan statistical area (MSA) in Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington.

Then the team analyzed how indebtedness changed in areas with a high fraction of Latter-day Saint members, compared to areas with fewer church members, in years with debt sermons. They controlled for factors such as GDP, house price index, unemployment, population size, the effects of living in each area, and the effects of events that would have influenced all areas in a given year.

In debt-sermon years, counties and MSAs with more church members exhibited relatively lower household debt-to-income ratios; the researchers found that the magnitude of the debt-sermon effect was on par with the effect of similar fluctuations in the house price index, which researchers already know is “an important driver of indebtedness,” Steffen says.

The effect may have been substantial because most of the debt sermons happened from 2002 to 2007, shortly before the financial crisis. During that time, lenders were approving mortgages without much regard for whether people could repay them, and many people were racking up more housing debt than they could afford.

Even in areas with a higher density of Latter-day Saint members, indebtedness still increased during that period. But “it just went up far less dramatically than in the regions with low membership density,” he says. In other words, church members may have been more cautious about taking on new housing debt than non-members who didn’t hear the sermons. In fact, the researchers’ analysis suggested that the magnitude of the debt-sermon effect on the debt-to-income ratio when hypothetically comparing an MSA with no Latter-day Saint members to an MSA with 21.5% members (a difference in membership density of one standard deviation) could be explained by roughly 1 in 10 church member households refraining from taking on an average-sized mortgage.

The study suggests that it would be worthwhile to examine other types of narratives too, such as those that spread quickly on social media. For example, people might read stories of AI taking over humans’ jobs, college graduates being crushed by student debt, or celebrities spending lavishly—all of which could influence their economic choices.

Would people be as strongly influenced by narratives from secular sources? Steffen says the answer could depend on who delivers the message. Latter-day Saint leaders often serve in their roles for decades and are well-known to members. “There is a lot of familiarity and trust,” he says. One could imagine that stories could be similarly influential if they came from a popular public figure such as Oprah Winfrey.

By improving their understanding of the effects of particular narratives, policymakers could be better equipped for designing initiatives to guide people’s economic decisions. For example, consider a program intended to encourage college attendance; researchers may find that stories of successful college graduates influence students’ educational choices, Steffen says. “What could we do to have more opportunities for people to be exposed to certain types of narratives that could positively impact their lives?”