Summary of JOIE article ( First View 27 October 2020) by Niclas Berggren, Research Institute of Industrial Economics (IFN), Stockholm, Sweden, and Therese Nilsson, Department of Economics, Lund University, Sweden. The full article is available on the JOIE website.
One of the oldest forms of intolerance and hatred is directed against Jews for being Jews. As Lipstadt (2019) documents, this intolerance is still around. Yet, the degree to which people are antisemitic differs between countries – even within Europe. According to the survey-based indicator ADL GLOBAL 100, only 4 percent of the Swedish population are antisemites, while 67 percent of the Greek population are.
In our article, we investigate if the noted cross-country variation can be explained by differences in economic freedom, that is, by differences in policies in institutions pertaining to the economy. This approach builds on earlier work on ours that relates economic freedom and globalization to various indicators of tolerance (Berggren and Nilsson, 2013, 2014, 2015, 2016; Berggren et al., 2019).
We focus on economic freedom since our overall research approach tries to locate seeds of tolerance and intolerance in institutions, and since antisemitism has a strong economic component. Jews are often stereotyped as being greedy and part of an international financial network taking advantage of economic freedom across borders. We argue that these stereotypes follow from a historic role of Jews as money-lenders (Johnson and Koyama, 2019), and from folk-economic beliefs about how the market economy works, regarding such things as being a zero-sum game and entailing exploitation.
We present two hypotheses of how economic freedom affects the prevalence of antisemitism. First, if the legal system is fair and effective, people do not feel threatened by those who are different, since the system ensures that economic life proceeds on an honest and mutually beneficial manner. This will entail less antisemitism. Second, if international markets are open, this may cause people with stereotypical perceptions of Jews as thinking that they will be better able than others at taking advantage of this openness, often at the expense of others. This will entail more antisemitism.
Our empirical analysis makes use of the indicator ADL GLOBAL 100 as the outcome variable. It gives the share of people in a country who say that at least six out of eleven negative statements about Jews are “probably true”. For example, one statements reads: “Jews have too much power in international financial markets.” We then try to explain variation in antisemitism across 106 countries by the Economic Freedom of the World index and its five areas, applying a number of control variables that are regularly used in the literature.
The findings show that the two hypotheses are both confirmed. The quality of the legal system is negatively related to antisemitism, while openness is positively related to antisemitism. Furthermore, the results are non-trivial in terms of the size of the estimated effects. If one increases economic openness by one unit (on a ten-unit scale), this is associated with an increase in the share of antisemites of 5.5 percentage points, while a one-unit increase of the quality of the legal system is related to a lower share of antisemites of about 3.5 percentage points.
It is certainly difficult to establish that these effects are causal, so we do not make strong claims about the effect of economic freedom on antisemitism. Still, the results hold quite well when we carry out an instrumental-variable analysis, lending some support to a causal interpretation. Moreover, we undertake an interaction analysis, and one important finding is that countries that make their economies more open can counteract the effect on antisemitism by strengthening the rule of law (at least if the initial rule of law is below six on the ten-point scale).
Like previous research, this study establishes a link between institutions and culture, in the form of economic-legal institutions having the capacity to influence how tolerant people in a society are. For other indicators of tolerance, economic freedom is almost entirely positive in its influence; but for attitudes towards Jews, we find mixed results, giving a reason for caution when liberalizing economies for international trade and capital movements. Fortunately, strengthening the rule of law appears to offer a force for combatting antisemitism, and such an institutional reform could certainly be implemented in conjunction with other reforms that cater to old stereotypes and prejudices.
References
Berggren, N., M. Ljunge and T. Nilsson (2019), ‘Roots of tolerance among second-generation immigrants’, Journal of Institutional Economics 15(6): 999–1016.
Berggren, N. and T. Nilsson (2013), ‘Does economic freedom foster tolerance?’, Kyklos 66(2): 177–207.
Berggren, N. and T. Nilsson (2014), ‘Market institutions bring tolerance, especially where there is social trust’, Applied Economics Letters 21(17): 1234–1237.
Berggren, N. and T. Nilsson (2015), ‘Globalization and the transmission of social values: The case of tolerance’, Journal of Comparative Economics 43(2): 371–389.
Berggren, N. and T. Nilsson (2016), ‘Tolerance in the United States: Does economic freedom transform racial, religious, political and sexual attitudes?’, European Journal of Political Economy 45(December): 53–70.
Johnson, N. and M. Koyama (2019), Persecution & Toleration: The Long Road to Religious Freedom, Cambridge: Cambridge University Press.
Lipstadt, D. (2019), Antisemitism: Here and Now, New York: Schocken.
