Despite the Economy’s Serious Ills, Israelis Surprisingly Content With Their Financial State

Eytan Avriel
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A shopping mall in Israel. Cohen argues that an additional weekend day will translate into more purchases.
A shopping mall in IsraelCredit: Nir Keidar
Eytan Avriel

The high cost of living and ever higher housing prices, stagnant incomes, huge wage disparities, high levels of poverty, monopolies and poor government services – five years ago middle-class Israelis poured into the streets to protest these conditions, and since then not much has improved. You would think that the average Israeli is dissatisfied with the state of the economy, and by extension with his or her own financial state.

But a survey by TheMarker conducted in April found the majority of Israelis are “satisfied” or “very satisfied” with their personal financial state – in fact, more expressed contentment than they did in a survey three years before.

The survey, conducted by Prof. Tamar Hermann of the Israel Democracy Institute, questioning 600 Israeli Jews and Arabs, found that 59.1% described their situation as satisfactory or very satisfactory. That compared with 52.7% in 2013. The age bracket in which people expressed the least satisfaction with their financial condition was 25-44; the most satisfied were over age 65.

The survey found instances of cognitive dissonance among the Israeli public, for instance demands for extensive government services but low taxes.

Hermann, who heads IDI’s Guttman Center for Surveys, said it’s not unusual for ordinary people to differ from experts on issues, even those that affect them personally. “People will say that the sky is blue, but astronomers will warn there’s an asteroid on the way. Often there’s a difference between how the public sees a situation and the reality,” she said.

She also suggested people saw the question about satisfaction as tantamount to a vote of confidence in Israel and its institutions like the army and the flag. People also differentiate between their personal financial condition and that of the country as a whole, she said.

“We’ve seen for many years that while [people] see their personal situation as good, the state of the economy they see as bad. How is that possible? The answer is they constantly hear that the situation is bad, but don’t see it touching on their personal situation or even the condition of people around them.”

Given the choice between American-style economics of low taxes and lesser government services or the Scandinavian model of high taxes and quality services, Israelis opt for Scandinavia by a margin of 54.3% to 31.2%, with the remainder saying they have no preference or don’t know.

Hermann said surveys going back to the 1970s have shown Israelis prefer a social democratic society, even though many elements of the Israeli welfare state have been pared back in the years since then.

But preference for Scandinavian economics is highest among older Israelis, while among the young the American model, while still less preferred, enjoys more support.

Arabs prefer America

Surprisingly, Israeli Arabs are the most likely to prefer the American model, with 63% choosing it. Even though they rely on government allowances more than any other group, Haredim also prefer America over Scandinavia, albeit by a narrower margin.

Hermann said that among Israeli Arabs, social mobility plays a much bigger role, which might explain the preference for a free market economy.

“Among Arabs the hope for economic mobility in linked with the sharp rise in educational levels in recent years,” she said. “If the father was a farmer with a low level of education, the hope is that if a son or daughter will learn pharmacy or medicine their economic and social status will rise dramatically. Among Jews the educational gap between the parents’ generation and the young in much smaller.”

Ironically, the preference for American-style capitalism among Israeli Arabs declines as they gain more education, she added.

But while Israelis prefer Scandinavian social democracy, 62% of them said that taxes in Israel were too high, which Hermann said suggested people weren’t prepared to acknowledge the cost of the services they want the government to provide.

However, nearly 80% of the survey’s respondents described their knowledge of economics as very good; among Israeli Arabs an even higher percentage gave that self-appraisal.

Asked what financial issues worried them the most, the top concern was not being able to save money. Just short of two-thirds said that issue “bothered them a lot” or “bothered them somewhat.” Next was the related issue of not being able to support their children, which bothers just over 60% of the respondents.

A smaller percentage, 56.5%, were concerned about being able to maintain their lifestyle into retirement, while 48.3% worried to some degree about being dependent on others financially.

“In Israel, the situation is better, at least how people feel it, than in American or Europe, and there is a relatively large group of people who feel their financial situation is stable,” said Hermann. “However, there is a significant group of people – a fifth or a quarter of the population – that have serious financial worries but it is clear that it is too small a group to challenge the political structure or the elite.”