A Measure of Confidence (Extract)

By ZIV HELLMAN
Extract from an article in Issue 11, September 15, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. The Taub Center's social confidence index has proven to be a simple-to-grasp concept that nonetheless provides insights into trends in Israeli society Joel Blankett is perturbed by a huge gap - a gap not only in income but also in confidence between rich Israelis and poor ones. "It is not surprising that the wealthiest are the most confident from the socioeconomic perspective," says Blankett, "but the extent of the difference between the richest and poorest indicates great polarization. This is a problem in Israel that we cannot afford to keep ignoring." Blankett is the man behind an index measuring "social confidence" in Israeli society, developed in recent years at the Taub Center, a Jerusalem social policy think tank, where he is a senior research coordinator. The questions at the heart of the index include: "Does your present income enable you to cover your basic needs?" "Do you fear you may suffer a major financial crisis in the future?" "Do you fear you may be unemployed in the near future?" "Are you better off than you were three years ago?" "Do you fear you may be the victim of criminal violence?" Respondents are asked to rate their answers to these questions along a five-point scale, from "very much" to "not at all," and these responses are fed into a mathematical model that yields a single number representing overall social confidence from 0 to 100, with 0 indicating an absolute lack of confidence and 100 the highest possible level of supreme confidence. The index has, in recent years, exactly tracked the fortunes of Israel's economy. First measured at 58 in 2001, it dropped sharply to below 48 by 2003, precisely as the economy hit a rough patch, unemployment rose and state welfare payments were cut. By 2005 and 2006, with the economy in recovery, the index recovered its 2001 level, and continued to rise to the record of 62 in 2007, buoyed by several years of breakneck GDP growth. But in the past year the index made an abrupt about-face, falling back down to 58 points - again in line with increased inflation and signs of an economic slowdown. Significantly, the downturn in the index began to be registered as early as September 2007, indicating that it has the potential of serving as a very-early "warning system" for the economy. Blankett, who speaks to policymakers in the context of meetings between Taub Center researchers and civil servants, uses the index to underscore claims he puts forward during those meetings. The drop in the index in the past year was registered across the board in every one of the questions used to measure social confidence - Israelis' confidence has been eroding in every measure, from fear of future unemployment to fear of being the victim of violent crime. Fears of unemployment and loss of wealth were especially prominent in the latest surveys, despite the fact that official living standards have remained stable, reflecting a public feeling that a recession here may be imminent in the wake of the economic woes currently afflicting the United States and Europe. When the recent drop in the index is broken down according to income levels, the bottom three income quintiles, or 60 percent of the population, all report falling levels of confidence - but the second wealthiest quintile maintained steady confidence, and the top quintile actually registered an increase in confidence in the past year, rising from 70.4 to 72.7. Blankett regards this as an indicator of increasing polarization in Israeli society - the wealthy are not only getting richer, they are also more confident in their position as time goes on. Significantly, however, the biggest drop in confidence was not measured in the lowest quintile, but in the next two levels up - an indication, perhaps, that the poorest in society have confidence that state welfare institutions will always be there if they need them, but the lower middle class is experiencing fear of slipping downwards. A large majority of those surveyed said that if they were to suffer from a major economic crisis they would not turn to state institutions as a first resort: 45 percent of respondents said they would turn to family for economic support in a crisis, compared to only 15 percent who would ask government agencies for assistance. Another 34 percent expected that no one at all would come to their aid in a crisis. Extract from an article in Issue 11, September 15, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.