d) While ethnic and linguistic fractionalization are associated with negative outcomes in terms of quality of government, religious fractionalization is not; in fact, if anything, this measure displays a positive correlation with measures of good governance. This is because measured religious fractionalization tends to be higher in more tolerant and free societies, like the United States, which in fact displays one the of the highest level of religious fractionalization. This result has no bearing, however, on the question of whether certain religious denominations are correlated with better politico-economic outcomes, an issue recently explored by Barro and McLeary (2002).

Woah. Here’s more:

Whether societal conflict is the result of fractionalization or polarization is largely an unresolved question in theory, calling for empirical work. The discussion of whether a country with many relatively small groups is more or less stable than one with only two equally sized groups is an old one, and goes back at least to Madison in the Federalist Papers of 1788 (nos. 10 and 11 see Hamilton et al., 1911). Without much of a stretch of Madison’s views, one can argue that a polarization measure is, according to him, the appropriate concept to capture heterogeneity.

Read the whole thing here (pdf).