The cost-benefit model

Despite a valiant attempt by two economists, the reasons Jews have excelled in business and science can’t be scientifically proven.

Al Pacino in the Marchant of Venice 521 (photo credit: REUTERS)
Al Pacino in the Marchant of Venice 521
(photo credit: REUTERS)
The Jews’ economic and intellectual successes following their emancipation created the impression that the People of the Book were particularly gifted in matters of business and science. Some ascribed this to Jewish cunning, others to a long tradition of learning and intellectual rigor. More than anything else, it was perhaps the desire for upward mobility and need to prove their worth in the eyes of gentiles that fueled “Jewish genius.”
Zvi Eckstein of the Interdisciplinary Center Herzliya and Maristella Botticini of Milan’s Bocconi University have a new, audacious theory. The two economists wrote The Chosen Few: How Education Shaped Jewish History, covering one and a \half millennia of history within less than 350 pages, to explain how and why Jewish descendants of Second Temple- period farmers became 21st-century bankers. If this much ambition were not enough to make a historian pale with envy, the authors believe they have found a single, linear cause: The educational revolution instituted by Pharisee leadership in Palestine around 130 CE. And they argue their discovery answers two more questions: Why Jews established a worldwide Diaspora of small urban communities, and why the number of Jews in the Middle East declined drastically during Late Antiquity and after the 13th-century Mongol invasions.
Their theory goes: The Pharisee decision, following the destruction of the Second Temple in 70 CE, to focus Judaism on learning and literacy had a lasting effect.
Academies were established in Israel and Mesopotamia, and (male) children received primary education that taught them to read and write. Universal literacy among Jewish men made them well-suited for crafts, banking and trade. Once Islam established an empire with numerous urban centers, Jews were equipped to spread across the Mediterranean and into Asia and Europe, following trade routes and establishing themselves as merchants and financiers. Combined with an existing legal framework, this made business efficient and led to an occupational specialization that lasts until today.
In the authors’ opinion, Judaism’s focus on education explains the large demographic declines experienced during the first half of the first millennium CE and again following the Mongol invasion. It is well-known that in the first instance many Jews converted to Christianity and in the second to Islam – but the authors link conversions to the Pharisee-established compulsory education. During both periods, they argue, being a literate Jew failed to incur pecuniary benefits because Late Antiquity Jews lived in an agrarian society, and following the invasions, Middle Eastern Jews faced de-urbanization and the collapse of long-distance trade. Some Jews converted to avoid paying to educate their sons, supporting the authors’ thesis that Jewish communities thrive in urban commercial cultures, but shrink in agricultural societies or when economies collapse – because then the heavy educational investment shows little economic return, prompting many Jews to exit the fold.
However, it is not clear that education drove farmers away from Pharisaic Judaism and towards other monotheistic sects.
The theory assumes that teaching literacy was expensive and without much value in agricultural society. This ignores the fact that adhering strictly to other Jewish laws was very costly, too. The authors also wrongly identify Pharisaic disdain of Amei Ha’aretz with scorn for illiteracy.
Nor is it certain that education came at a heavy price. The authors themselves state teachers were usually paid through the community. They repeatedly quote the prohibitive cost of books, but books did not exist in antiquity nor did students have to purchase their own scrolls. It’s also not clear that sending sons to learn instead of to the fields was costly; school was probably a half-day affair with work after. Moreover, compulsory education still represented a rabbinic ideal – not reality.
Medieval Jews certainly profited from being literate while many converted, but reducing their motivation to a cost-benefit analysis of education is simplistic. In fact, it is questioned by examples cited by the authors themselves. In addition, the demographics provided by the authors to prove their claim are highly debatable themselves.
Where the authors deserve merit is for refuting the long-standing canard that Christians forced Jews into money lending through laws against Christian usury or Jewish land ownership. Eckstein and Botticini show convincingly that Jews were active in lending and financing long-distance trade before Christian law excluded them from agriculture and other occupations. In doing so, the authors rely heavily on the work of historian Michael Toch, who earlier debunked this outdated thesis. But even if Christians did not force Jews into the profession, they definitely kept them there.
The book is nicely presented but reads like an anthology of papers, and some historical inaccuracies should have been avoided. The main point of contention between Sadducees and Pharisees was if the oral Torah had validity – not whether Judaism was about sacrifices or studying Torah. Thirteenth-century Jews in Mesopotamia and Persia did not adhere to the Sephardi tradition, which originated with the Jews’ expulsion from Spain in 1492.
Ultimately, my main point of contention is methodological. Historians study source material and draw careful conclusions based on primary evidence. Economists devise theories and formalize them in models to test with actual data.
Eckstein and Botticini present their readers with two formalized models. In both, Jews obtain utility from consumption and religion, and choose how to educate their sons or whether to convert. Some algebraic manipulation and quantitative operations provide the obvious results that when the cost of education becomes prohibitive or economic production falls to low levels, Jewish farmers will choose not to pay for schooling. The logic behind these ideas is easily understandable and the formalization unnecessary, because the models can’t be tested.
The authors admit they first thought about their theory over lunch in 2000, then went out to see if they could find evidence for it. Despite their claims, it seems they did not.