Jay Hartzell was a teenager when his mother married a Methodist minister. Now he is using his family’s religious background in a surprising way—to study finance.

Hartzell, chair of the Department of Finance and executive director of the Real Estate Finance and Investment Center, has studied how minister pay affects minister performance and how minister performance affects church attendance.

Hartzell's research shows that oil prices in Oklahoma correlated with church attendance. As gas prices went up, attendance decreased.He presented his research in a talk titled “Economic Forces and the Church: The Role of Human Capital and Incentives in Religion,” as part of the Undergraduate Business Council’s Faculty Research Presentation Series on Tuesday, Oct. 4.

Hartzell first made the connection between religion and finance when speaking to his graduate student who had also grown up in a religious family. Initially, the duo was curious about a variety of churches—including Catholic, Episcopalian, Jewish, Baptist, and Methodist. Convenience was on their side, however, and Hartzell was able to make use of records from his stepfather’s time in the Methodist church.

More than 40 years of records were compiled and charted, illustrating 100 variables on membership, finances, attendance, compensation, and facilities for 727 churches with an approximate population of 250,000 congregants. The boxes of records Hartzell poured through documented trends in the Methodist Church in Oklahoma.

The results of the study show that even an organization committed to the divine must wrestle with more worldly concerns.

Pastor incentives include salary, housing, and the potential to be promoted or demoted at their next church assignment. Pastors who perform well at one church are statistically likely to perform well at their next location, and Hartzell found that performance directly correlates with membership and attendance.

Hartzell also explained that oil prices in the region played a substantial role in membership, minister mobility, and attendance. For instance, attendance at the Shawnee Bethel congregation was countercyclical with oil prices—as prices went up, attendance went down and vice versa.

The study revealed that clergy receive pay-performance incentives much in the same way as corporate managers. He described the pastors as human capital, important for the religiosity of the church. As the Oklahoma Methodist Church learns about the ability and fit of each minister, they are placed at increasingly successful church positions that result in higher attendance and thus higher revenue. However, he also noted that the placement of a new minister at a church can correlate with a dramatic jump in attendance.

Hartzell said it is also important to note incentives when researching the mobility of the Methodist pastors. This labor area is unique, he explained, because incentives may undermine the credibility of the ministers as religious leaders.

Looking at religious activity more broadly, Hartzell said U.S. church giving typically equals one percent of GNP. That amounted to $100 billion in 2010, representing .35-.50 percent of all charitable giving. Participation rates tend not to decline with income and education, and there are demonstrated links between religiosity and crime, health, marriage, fertility, education, economic growth, and subjective well-being. Hartzell also referenced a Gallup survey of 143 countries where 80 percent of respondents said "religion plays an important part [in their] daily lives."

The Undergraduate Business Council said it chose Hartzell to present research due to his unique topic, but McCombs students in attendance said they felt it related closely to what they had learned in classes.

“I think that Dr. Hartzell’s presentation shows that even churches function as organizations that use incentives to promote and motivate preachers to perform effectively,” senior MIS major Nicholas Navarro said.

Despite the complexity and volume of his research, event organizer Connie Tao felt that students were able to understand and appreciate what they heard.

“He did a great job of communicating the intricacies of his research in terms that the audience could understand,” she said. “He was a great presenter and I hope to take a class from him in the future.” 

CORRECTION: An earlier version of this story incorrectly stated the amount of church giving in Oklahoma as being $100 billion in 2010. That number refers to U.S. church giving.