Markets and Market Failures in the Jewish World

One area of discussion at this week’s ‘Conference on the Future of the Jewish People’ in Jerusalem was managing the budgets and resources within the Jewish world. As conference host JPPI President Avinoam Bar-Yosef stated, “… conference participants will look at the entirety of the resources available within the Jewish world and will consider more efficient ways to utilize them to meet future strategic needs of the Jewish people.”

In preparation for the Conference, a working paper, Building a Jewish People Perspective on ‘Ways and Means by Steven Popper and Dov Maimon was distributed.

An excerpt:

Citizens of a state make demands upon their government. In the Jewish world, some of the most crucial issues have no one to give them voice. The increasingly significant number of young unaffiliated Jews or the children of intermarried couples, for example, do not loudly demand avenues for access to the Jewish community. Jewish youth of unaffiliated families do not petition for the opportunity of a Jewish education. Instead, they drift away. If the structures existed to provide them with entry points appropriate to their situation and stage of life, they might avail themselves of them. In their absence, they are simply lost to the Jewish people. In Western developed economies where most reside, their individual Jewish identity is not an existential necessity, but the Jewish people’s need to stem the resulting outflow very well may be.

There is a subtler dynamic at work, entirely in line with the market failures model. The leaders of Jewish organizations understand better than anyone that they operate in a market, and may have a long-term incentive to halt this slow leakage from the Jewish people. Jewish organizations know that those who exit will never mature into the donors and funders of the future. Over the short term, however, when funds are limited and the “return on investment” from serving a marginal population is unclear, the incentives move in the other direction. There is a strategic economic incentive to invest but there may be a market failure precisely analogous to that of the under- production of R&D: the benefit to the Jewish people collectively may be greater than the expectation of gain to the individual organization.

In a similar manner, even for those who remain affiliated or otherwise self-identified as Jews the quality and availability of Jewish experience is in most cases not a matter of primary concern.

If, then, the balance between sources and uses, means and needs, is conducted through the mediation of market mechanisms, do we detect market failures in the sense that the outcomes we see are in accord neither with our desired vision of the Jewish future nor the needs we perceive to achieve that vision? Is there an appropriate alignment of demand, need, and priority being articulated by the individual Jewish organizations in their individual pursuit – to say nothing of the alignment of adequate resources consistent with that need? Quite simply, in addressing needs are we happy with the situation today? If not, what might be the effects of market failures over the longer term? Where do we wish to be in 10 or 20 years? What can be done and what should be done to get us there?