For most (not all) religious individuals I know, belief in god and the supernatural is such an ingrained template in their understanding of the universe, I have no doubt they would be psychologically worse off, living as atheists, than living as religionists and accepting the obvious moral inferiority of the Christian-Judaeo god. It requires an active suppression of what your logical mind is telling you, in favour of allowing your emotions, paranoia and fear overtake your reasoning.
I would guess that the majority of humanity simply cannot tolerate the notion that mortal existence is ephemeral, that they will simply live a brief time, then die, and that will be it. Simply put, most cannot accept the finality of death. Thus, if transcending this "fear and trembling" (as Kierkegaard so eloquently described it) means worshipping a ridiculous goat-herders god conceived in the desert 2000 years ago by wandering nomads, than so be it. They are happy with this choice, and it provides the necessary amount of psychological anesthesia to allow them to live day after day. I have basically described my JW relatives in the preceding paragraph.