The Chosen Few: A New Explanation of Jewish Success

A basic tenet of HBD is that different races have evolved differently over time, and that discussing such group differences, as empirical phenomena, is part of scientific inquiry.

On Paul Solman’s PBS blog, he has an interview of sorts with economists Maristella Botticini and Zvi Eckstein, about their new book The Chosen Few: A New Explanation of Jewish Success. From Solman’s preface:

Nine years ago, someone sent me an academic paper that put forward a radically new explanation of why Jews have been so successful economically. Written by economists Maristella Botticini and Zvi Eckstein, the paper explained Jewish success in terms of early literacy in the wake of Rome’s destruction of the Temple in 70 C.E. and the subsequent dispersion of Jews throughout the Roman empire – Jews who had to rely on their own rabbis and synagogues to sustain their religion instead of the high priests in Jerusalem.

You may know a similar story about the Protestant Reformation: the bypassing of the Catholic clergy and their Latin liturgy for actual reading of Scripture in native languages and the eventual material benefits of doing so. Why is Northern Europe — Germany, Holland, England, Sweden — so much more prosperous than Southern Europe: Portugal, Italy, Greece, Spain? Why do the latter owe the former instead of the other way around? Might it have something to do with the Protestant legacy of the North, the Catholic legacy of the South?

The questions Botticini & Eckstein look into range from why jews have overwhelmingly been urban-dwellers vs. farmers; why such a small percentage of the general population is disproportionately represented in certain skilled and economically profitable occupations; and the like.

Modern explanations of why the Jews became a population of craftsmen, traders, shopkeepers, bankers, scholars, and physicians have relied on supposed economic or legal restrictions. But these do not pass the test of the historical evidence.

This is one of our main and novel messages: mass Jewish literacy was key. It enabled Jews — incentivized Jews — to abandon agriculture as their main occupation and profitably migrate to Yemen, Syria, Egypt, and the Maghreb.

The key message of The Chosen Few is that the literacy of the Jewish people, coupled with a set of contract-enforcement institutions developed during the five centuries after the destruction of the Second Temple, gave the Jews a comparative advantage in occupations such as crafts, trade, and moneylending — occupations that benefited from literacy, contract-enforcement mechanisms, and networking and provided high earnings.

Of jewish prominence in areas of finance:

Already during the 12th and 13th centuries, moneylending was the occupation par excellence of the Jews in England, France, and Germany, and one of the main professions of the Jews in the Iberian Peninsula, Italy, and other locations in western Europe.

A popular view contends that both their exclusion from craft and merchant guilds and usury bans on Muslims and Christians segregated European Jews into moneylending during the Middle Ages. But our study shows, with evidence we have come upon during more than a decade of research, that this argument is simply untenable.

Instead, we have been compelled to offer an alternative and new explanation, consistent with the historical record: the Jews in medieval Europe voluntarily entered and later specialized in moneylending and banking because they had the key assets for being successful players in credit markets:

  • capital already accumulated as craftsmen and traders,
  • networking abilities because they lived in many locations, could easily communicate with and alert one another as to the best buying and selling opportunities, and
  • literacy, numeracy, and contract-enforcement institutions — “gifts” that their religion has given them — gave them an advantage over competitors.

With these assets, small wonder that a significant number of Jews specialized in the most profitable occupation that depended on literacy and numeracy: finance. In this sector they worked for many centuries. As they specialized, just as Adam Smith would have predicted, they honed their craft, giving them a competitive advantage, right up to the present.

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