Short answers, pulled from the story.
Contemporary writers trace the economics of religion back to Adam Smith, who argued in The Wealth of Nations (1776) that religious organisations are subject to market forces, incentives, and competition like any other sector of the economy. Max Weber extended the analysis in 1905 by linking the Protestant Reformation to the rise of modern capitalism.
The believing channel, as proposed by Azzi and Ehrenberg in 1975, concerns the costly effort individuals invest in cultivating a divine reputation, including time and money allocated to religious institutions. The belonging channel, associated with Iannaconne's 1998 club good model, focuses on how religious group membership shapes trust and cooperation among adherents. Experimental studies generally find that group belonging has a greater influence on behaviour than doctrinal belief.
Municipalities in Spain with a history of stronger inquisitorial presence show lower economic performance and lower educational attainment today. This is one example of religion having long-lasting effects on a society and its economy that persist well beyond the period in which the religious institution was active.
In 1816, school attendance in Germany was roughly 50 percent in Catholic regions and roughly 66 percent in Protestant regions. Higher literacy rates among Protestants remained visible in Prussian census data through the 1870s and 1880s, a gap linked to Martin Luther's emphasis on Christians reading the Bible for themselves.
Regions in England exposed to Cistercian monasteries experienced faster productivity growth from the 13th century onwards. The cultural influence was persistent even after the monasteries were dissolved, and modern attitudes toward hard work remain positively associated with historical Cistercian presence in a region.
Endogeneity bias is the problem of distinguishing whether something intrinsic to religion drives economic outcomes or whether a factor merely correlated with religion is doing the real work. Cross-country studies are criticised for their inability to separate these two explanations; researchers have moved toward field and natural experiments to identify causal effects more cleanly.