Subsidized sacrifice: State support of religion in Israel

Abstract

This paper offers three economic arguments for ending discriminatory religious law in Israel. First, current subsidies have created massive poverty and welfare dependence in the Israeli Haredi community. With men remaining in Yeshiva till an average age of forty and the Haredi population doubling each 16 years, that community is dangerously dependent on subsidies and charity, which are unlikely to increase fast enough to support it. Previous work developed a model to explain why fathers with families in poverty choose Yeshiva over work. This paper explores policy implications of that analysis, stressing the extremely inefficient economic incentives in subsidizing membership in a community that requires personal sacrifice. Subsidies are largely dissipated by the induced increase in sacrifice. A second argument for ending discriminatory religious law is that monopoly status granted to a religious denomination limits competition in the religious services market, resulting in low quality services for the remainder of the Jewish population. Finally, by allowing discriminatory subsidies, the State encourages political-religious parties to organize. These have destabilized Israeli politics. The paper proposes equitable reforms which compensate the Haredi community for lost subsidies and religious monopoly status by expanding needs-based social programs. These reforms would foster a self-sufficient Haredi community, benefit a wider disadvantaged population, help restore a functioning political system and encourage a healthy relationship between branches of Jewish tradition within Israel.