Classical and Contemporary Islamic Studies

Classical and Contemporary Islamic Studies

Behavioral Evidence from Faith-Based Consumption in Iran's Economy: A DSGE-Based Analysis

Document Type : Scholary

Author
Hamid Reza Izadi
Department of Economics, Faculty of Management and Humanities, Chabahar Maritime University, Chabahar, Iran
10.22059/jcis.2025.375910.1380
Abstract
This study examines the impact of faith-based consumption on household utility and economic resilience in predominantly Muslim societies, with a particular focus on Iran's economy. This study utilizes a Dynamic Stochastic General Equilibrium (DSGE) model; household consumption is categorized into halal and non-halal segments to assess the relationship between the share of halal goods and overall utility outcomes. The behavioral DSGE model simulates responses to shocks in technology, income, and government spending, examining how religious preferences shape consumption decisions. The findings reveal that faith-based consumption plays a significant role in promoting financial discipline, consumer moderation, and subjective well-being. Religious orientation leads to responsible budget allocation and enhances household welfare through institutional support, poverty alleviation, and sustainable market behavior. Empirical findings indicate that higher shares of halal consumption are positively associated with utility and welfare gains. Furthermore, strong religious commitment enhances household resilience, mitigates macroeconomic vulnerability, and fosters a consistent intertemporal consumption pattern under economic stress. Simulations indicate that higher halal consumption shares enhance household welfare and stabilize consumption under economic stress.
Keywords
Faith-Based Consumption
Households
DSGE Modeling
Utility of Consumption
Islamic Economics
Subjects
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Classical and Contemporary Islamic Studies
Volume 8, Issue 1
Winter & Spring 2026
January 2026
Pages 43-51