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Economic Influences on Judaism in America

Judaism must compete for resources with other forms of consumption.

Reprinted with permission from AJS Perspectives: The Newsletter of the Association for Jewish Studies. Provided by the Berman Jewish Policy Archive.

Economics is the study of how people allocate scarce resources in the pursuit of multiple objectives. The main influences affecting these decisions are the prices of goods and services, and current income augmented by the fruits of past investments that together determine the size of a family’s budget. Since Judaism must compete for resources with other forms of consumption, it is by definition an economic good subject to the same economic laws as other goods and services. Dollar

For example, the law of demand implies that if Jewish education is very expensive we can expect to see fewer people choosing it for their children, and that this effect will be most pronounced for families on limited budgets. A family investing in a new home is trying to satisfy multiple objectives, and if their decision takes them far from a synagogue they will attend only if they drive.

The Price of Judaism in America

The prices of goods and services have two components, money and time, and each of these comes from its own budget. Most people are accustomed to thinking about money budgets and income, but every act of consumption also requires time and our time is limited to twenty-four hours per day. We need to budget this scarce resource just as we need to budget our money: we speak about spending time, saving time, wasting time, the value of time, and the efficiency with which time is spent.

An economic good is considered to be time intensive if the money component of its full price is small relative to the time component. Religion in general, and Judaism in particular, is an example of a self-produced good—i.e., one that cannot be bought directly without the consumer’s active participation in its production—and as such is very time intensive. When considering the price of Jewish observance in the United States, its time component is of primary importance.

Modern scholarship has paid much attention to the economic characteristics of self-produced goods and to the problem of imputing a money value to an hour of time. The hourly wage that a person earns in the labor force is a good first approximation of the value of an hour of his or her time in that it represents what would be given up if the person worked one hour less. The equivalent of an hourly wage must be imputed for people not in the labor force (because they are students, housewives, retired or disabled) and for the unemployed, the self-employed, and those paid by salary or commission. The basic concept, however, is the same for everyone: each person’s hours are priced according to their value in the labor market.

One implication is that the value of time can be different for different people. Some people feel more time constrained than others even though everyone has exactly the same 24 hours in a day. A related implication is that people with high wage rates will face a higher full price–i.e., money plus the value of time–than people with low wage rates for any consumption item, even though the money price is the same for both. The difference is especially large for time-intensive goods, of which Jewish observance is a prime example. The law of demand thus leads us to expect high-wage earners to reduce their observance of time-intensive religious practices much more than low-wage earners.

American Jewry as a community experienced great upward economic mobility during the 20th century and is currently composed largely of people in relatively high-wage occupations. This goes far to explain not only the emergence of time-conserving American synagogue movements (Reform, Conservative, and Reconstructionist) but also their pervasiveness and persistence in the American Jewish community.

Other Economic Influences

The effect of high wages on the full price of Jewish observance should not be confused with the effects of high incomes, although the two are often seen together. In general, people with high incomes can and do spend more than people with low-incomes on everything. Judaism is no exception to this rule. Among people with the same wage rate, and thus facing the same full prices, those with larger budgets can be expected to spend more on Judaism as well as other goods and services. If most people’s income comes from their own earnings, however, most people with high incomes would also have high wage rates and thus face high full prices. Rising incomes would have a positive effect on religious observance in general, but rising wage rates would counteract this by increasing the relative price of time-intensive practices.

During the first half of the 20th century the wage effect was so strong that it dominated the income effect and religious consumption appeared to decline with income. More recently, however, the American Jewish community displays greater diversity in its sources of income so that the association between high wages and high incomes is much looser. Although American Jews still have high wages and tend to favor the time-saving practices of American synagogue movements, their income levels are no longer good predictors of their choice of religious affiliation within that category.

The effects of high wages on religious choices are also often confused with the effects of education. If highly educated American Jews seem to be religiously nonobservant, this may have more to do with the high wage rates that their education commanded than with the substance of that education per se. Like Albert Einstein, many Jews in well-paid professional occupations continue to identify with religious Judaism but rarely attend a synagogue service. Secularism has a wide appeal for many educated Jews, either as an alternative to religious Judaism or as the “secular Judaism” counterpart to the modern synagogue movements.

Yet religious secularism is not confined to the highly educated, nor is it a necessary consequence of advanced secular learning. As was the case with incomes, higher education may be associated with reduced synagogue attendance primarily because of the higher wages that education confers rather than the education in itself. Having said this, it is also true that education is a transformative experience, whether we are talking about basic literacy, rocket science, or advanced literary studies.

Although schooling is often motivated as an investment in skills that will yield higher earnings in the labor market, it affects skills used in all aspects of a person’s life, if not his or her very identity, and how he or she relates to the world. The advanced level of secular education typical in the American Jewish community has important implications not only for its income and for the price of Judaism to its members, but also for the resonance of Jewish rituals and traditions.

The sophistication of a congregation’s mastery of history, geography, political science, and sociology influence its understanding of the weekly Torah reading as much as its mastery of Jewish knowledge. Education may be the consequence of an economic decision, and it may have an important indirect effect on religious observance by raising the price of time, but it may also have a direct effect on the efficacy of various rituals and traditions as a form of religious expression.

The Relationship Between Religion and Economics

People make many investments in themselves apart from the schooling that provides labor market skills. They make many health-related investments, both preventative and curative, and they make many family based investments like marrying and raising children. They also invest in religious training for themselves and their children. Each of these investments forms a different type of human capital, and most forms of human capital are mutually complementary.

This implies that the more of one type that you have, the more profitable it is to invest in the others. Specifically, people with a higher level of secular education face higher rates of return from investments in on-the-job training, in health, in family, and in Jewish education. Any reader who finds this claim to be counter-intuitive is encouraged to pursue the matter further in the substantial economic literature on human capital and on demography.

The relatively new field of economics of religion has also been providing evidence that religion itself affects many of our decisions regarding human capital investments. Both religious affiliation and the degree of religiosity have been shown to be important for studies of labor force phenomena (e.g., participation, employment, earnings, occupation), demographic patterns (marriage, divorce, fertility, mortality, migration), and health behaviors. Jews behave differently in some respects than people with other religious affiliations, but Jews share with most non-Jews the same effects of religiosity, as measured by the intensity of belief and the amount of observance. The economic mechanisms underlying these relationships have yet to be well understood.

Taken as a whole, these findings raise important questions for the field of Jewish studies. What is it about Judaism that causes Jews to make different economic decisions than non-Jews? How do these differences depend on which non- Jews are being used for comparison? Have changes in the economic environment of American Jews affected these differences, causing them to change over time? If so, how has this been reflected in the history of American Jewry, and American Judaism, in the past 130 years since the start of large-scale immigration from eastern Europe?

What inferences can be drawn for projections of American Jewish life into the future? What aspects of the economic environment affect the religiosity of American Jews, and what are their implications for Jewish family life? And, finally, how can Jewish communal organizations be most effective in the economic environment of the 21st century?

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