Sect, Subsidy and Sacrifice: An Economist's View of Ultra-Orthodox Jews

54 Pages Posted: 16 Dec 1998

See all articles by Eli Berman

Eli Berman

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 1999

Abstract

The Israeli Ultra-Orthodox population doubles each seventeen years. With 60% of prime-aged males attending Yeshiva rather than working, that community is rapidly outgrowing its resources. Why do fathers with families in poverty choose Yeshiva over work? Draft deferments subsidize Yeshiva attendance, yet attendance typically continues long after they are draft exempt. I explain this puzzle with a club good model in which Yeshiva attendance signals commitment to the community, which acts as an extremely efficient and generous mutual-insurance club. Subsidizing membership in a club with sacrifice as an entry requirement induces increased sacrifice, compounding the distortion and dissipating the subsidy. Policies treating members and potential entrants equally are Pareto improving. The analysis may generalize to radical Islamic sects and other "fundamentalist" groups. These also practice mutual insurance and also seem to respond to incursion of markets by increasing the stringency of prohibitions, which may explain their high fertility rates.

JEL Classification: H2, I3, J1, J2, N0, O1, Z1

Suggested Citation

Berman, Eli, Sect, Subsidy and Sacrifice: An Economist's View of Ultra-Orthodox Jews (August 1999). Available at SSRN: https://ssrn.com/abstract=141977 or http://dx.doi.org/10.2139/ssrn.141977

Eli Berman (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

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