A Sense of Cheapness
💸 Maybe Jewish life isn't too expensive? 💸
George Costanza: "I'll sniff out a deal. I have a sixth sense."
Jerry Seinfeld: "Cheapness is not a sense."
-Seinfeld, “The Reverse Peephole”
Could Jewish life be too cheap?
“Excuse me!?!?” you may be wondering.
“Josh, you’ve gone off your rocker. Haven’t you read anything over the past several decades about how much it costs to be Jewish and the rising costs of day schools, camps, kosher food, etc.?”
Yes, I have read all of these things.1
And as a consumer of Jewish life, I agree with them 100%.2
Giving my family the Jewish life I want for them is expensive when you consider the cost of day school, camp, etc., and that’s before you factor in the fact that the communities with the most extensive options tend to have the highest costs of living (e.g., New York, Los Angeles, etc.).
But I do not write Moneyball Judaism from the perspective of the Jewish consumer; I write it for the leader who wants to optimize decision-making for the good of all Jews, not just me. And if that’s my goal, it’s time for us to learn why we spend too much time talking about price and not enough time talking about this week’s big idea, willingness to pay.
The alternative is the current state of affairs: in too many organizations, professionals are paid pitiful salaries for critical work to keep costs low, programs lose participants because every expense is nickel-and-dimed, and all the while, participants and/or parents still complain that programs cost too much!
Did I get your attention?
Maybe cheapness is a sense, after all…
Willingness to Pay
When deciding whether or not to buy something, what do you look at first?
If you’re like me, you look at the price.
I may love the idea of owning a script of The West Wing’s pilot signed by Aaron Sorkin, but I will probably pass when I see that this item goes for over $300 on eBay. Something about hearing the price “$300” turns me off.
But let’s say a generous reader sent me a message saying they found signed copies of this script on a different website for $50. Would I be interested? Suddenly, I’m putting in my credit card with unadulterated glee.
(Cheaper than getting a PhD in Street Stride.3)
In each scenario, I can afford and want to buy the script. However, once the item crosses a specific price point, I will no longer make the purchase. This is my willingness to pay (WTP).
WTP is as old as modern economics; anyone selling a product must understand supply and demand. But if you need a refresher, may I suggest enrolling in Father Guido Sarducci’s Five Minute University?
Generally, Richard and Peggy Musgrave are credited with popularizing WTP in their 1959 book Public Finance in Theory and Practice.4 Musgrave’s analysis is highly technical, so I find that it’s best to explain WTP by way of example:
Let’s say you are planning a teen Shabbaton.5
Theoretically, your organization could run a Shabbaton and charge nothing, absorbing all the costs internally. Many people sign up, but you have no revenue. This model is unsustainable unless you raise revenue, sometimes by fundraising but primarily by charging registration fees.
However, you could charge $1,000 and tell parents their children will stay at a five-star hotel, eat Michelin-quality meals, and come home with a new set of AirPods. In this scenario, you may offer something of the highest quality, but your attendance would likely plummet because people balk at the price.
As a result, running the best possible program requires identifying the upper limit of what you can charge before people stop registering. This upper limit is a person’s Willingness to Pay.
Determining WTP6 is not an exact science and is affected by many factors (one of the reasons I love monadic surveys, which we will return to.) Returning to Jewish life, one of the reasons we need to focus on WTP instead of price is that many, perhaps most, potential consumers of Jewish life will complain no matter what price you charge. Returning to our Shabbaton example,
If you have a family complaining that your school charges $300 for the annual Shabbaton, it’s naive to assume that this family would not have complained if you charged $200. Some people will complain about any price you charge, even if they can afford it.7
If you say that the Shabbaton is $300 and then give someone a $100 discount, the family will likely complain less (this time, at least). But just because they complained about the price does not mean it was too much; the complaint tells you more about the family than the price.
Of course, our organizations do not exist to make a profit; they exist to achieve a mission. However, if you adopt the stance that the price should be as low as possible no matter the costs, you may start skimping on budget items where you have “wiggle room”: book a crummy hotel, serve terrible food, and minimize how much it costs your organization to operate such that you can run the Shabbatonim, cutting back on administrative staff, salaries, etc.
This brings me back to why I have no idea whether or not Jewish life is too cheap (and you likely don’t, either.)
In many cases, the only principle Jewish organizations follow when setting a price for their programs is “lower is better than higher,” even though that approach may not matter to people who choose to buy their product. Thus, we could have a situation where organizations starve themselves to death to charge low prices for programs that people will pay for at a higher price.
(And by the way, like any Immunity to Change8 scenario, the organizations that starve themselves eventually pay the piper from running things on the cheap, thereby hurting their participation in the long run.)
Does this mean you should go out and jack up the price of all of your programs?
Of course not. But look before you leap.
Religion and the Rise of Capitalism
I made my peace long ago by liberally using terms like “price point” and “customers” in my rabbinate.9
I’m a bit of an outlier; it’s not that I want to ignore the soul that must be inherent in Jewish communal work, only that I feel like we minimize my impact when we go out of our way to avoid concepts that can help us do our job better. It’s a means to an end, but an essential means, nonetheless. As Pink Floyd sings: “For long you live and high you fly, but only if you ride the tide:”10
If you are ready to travel to the dark side and explore how Judaism and capitalism are more intertwined than you might think, consider reading Benjamin Friedman’s Religion and the Rise of Capitalism.
Friedman is an economist at Harvard. His history compares the rise of modern economics under Adam Smith with the changes in religious institutions over that same period, particularly in how institutional churches viewed capitalism as a positive or negative force in the pursuit of spiritual truth.
For example, every religion debates the question of free vs. predestination: do we have complete control over our choices, or does some more significant force determine our choices? Turning to modern economics, this religious debate is quite similar to debates about wealth inequality: When someone is at the top or bottom of the economic ladder, how much is their position a function of their choices versus larger forces beyond their control?11 In each case, our beliefs significantly impact the real world, even though it is impossible to know the answer to either question with certainty.
However, Friedman points out that because the “worldview [of ordinary citizens]...rests on presumptions that originate in the religious thinking of either today or sometime in the past,” matters and faith and matters of policy are far more intertwined than we imagine. And since “No one in a democratic society is going to tell citizens that their religious presumptions are wrong,” the fusion of religious views in capitalism can and does lead to all kinds of societal dysfunction.12
Returning to Willingness to Pay, Friedman’s book challenged me to probe what economic assumptions might lie beneath the impulse always to spend as little as possible on Jewish life. On the one hand, that belief is driven by some altruism, as we don’t want only a tiny few to be able to afford Jewish life. However, nowhere does it say that the Jewish life we provide needs to be done on such a shoestring budget that many organizations operate on the precipice of financial collapse. Could it be that we demand too little financially because we’ve internalized beliefs that it is, in some sense, “good” for Jewish organizations to be economically fragile?
Again, it’s all a matter of belief. But I hope I am forcing you to ask the question.
The Origins of Economic Belief
1,336
The number of pages in Robert Caro’s The Power Broker, the iconic biography of Robert Moses that finally became available as a digital book on September 16th.
What I Read This Week
Haredi Faith and the Draft Controversy: I have little sympathy for the arguments about why Haredi Jews in Israel do not serve in the army.13 But I loved this piece in Sapir, which deeply delves into how the current situation will require a theological adjustment.
The Mystery of the Cover Letter: If you’re in a job search, you’ve probably written a few cover letters. And whether or not you are in a job search, you’ve probably wondered whether or not these letters matter. Read this piece for insight and comic belief (in that order.)
Did We Do the Dodo Bird Wrong?: The dodo bird is used in various contexts, and rarely is that context positive. Nautilus thinks that may be an injustice to the dodo bird.
Why is Religious Giving Different Than Other Forms of Philanthropy?: In the United States, giving to religious institutions dwarfs all other forms of philanthropy. Inside Philanthropy does a great job of asking, “Why?”
How Taylor Swift Defuses a Troll: Yet another reason Taylor Swift rules the world. She’s a dynamo.
Sort of.
In a vacuum, of course, I think that camp, day school, etc., cost “too much” (whatever that means). But that doesn’t stop me from purchasing them. This is another reason why willingness to pay matters much more than price.
Shame on the people who uploaded this clip for not making the title “They Call Me the Jackal.” Wingnuts should rebel, on principle…
Richard A. Musgrave and Peggy B. Musgrave, Public Finance in Theory and Practice, Fifth Edition (New York: McGraw-Hill Book Company, 1989).
Chapter four, " Public Provision for Social Goods, " contains most of the earliest references to “willing to pay,” which is the phrase Musgrave uses.
Yes, I have some experience in this area. While you could easily create hypotheticals in other sectors, using a typical weekend Shabbaton is an excellent example of how specific prices may matter more than others:
For example, day school and camp are major high-ticket items, but both are forms of education and childcare, which most families need and assume will be a significant part of their family budget. One might argue that if a parent does not spend money on Jewish day school or camp, they will still need to spend money on something else, even if it’s not Jewish.
But sending a teenager away for a weekend Shabbaton is a discretionary expense; it doesn’t solve a long-term problem. So, a parent looking at the price will question whether or not it’s “worth it,” even though the cost of a weekend Shabbaton is far less than a summer at camp.
This distinction is a perfect example of why willingness to pay is more important than price. The sticker price doesn’t tell you much about how people will behave.
Or worse, the person shows up to your office in a Ferrari after a weekend at their second house asking for the same financial assistance as a family where both parents are out of work.
As a child, I vigorously argued that there should be for-profit synagogues. So I guess the strange quirks show themselves early…
Remember the just world hypothesis?
Confused about this picture?
This is an homage to the passage in the Talmud that the Hazon Ish allegedly quoted to David Ben-Gurion on why the value of yeshiva students was greater than anything the largely secular population of Israel could bring to the world.