Traditional Belief Systems and Economic Behavior: Evidence from Beer Retailers in the Eastern DRC

Abstract

This study examines the economic effects of anti-theft protection spells on the economic decisions of beer retailers in the eastern Democratic Republic of the Congo, where such beliefs are widespread, and expectations of theft lead retailers to lose business due to anxiety and frequent stock-outs. We extend access to retailers to undergo the rituals of three regional reputed witch doctors, and randomize the timing of the rituals. For retailers who report believing that the spell worked, the ritual reduces reported stress and the perceived risk of theft. Furthermore, as a result of the ritual, they purchased more bottles of beer, resulting in higher inventories and fewer stock-outs for weeks after the treatment, which increased sales and profits. None of these effects are found for retailers that did not believe in the efficacy of the ritual. The findings suggest that the beliefs in the existence of supernatural protection are significant enough to affect psychological well-being, economic decisions, and business growth.

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