Expert Commentary

Anti-Semitism continues to hurt German pocketbooks

Jews have long been associated with finance and banking. Today, people in areas of Germany that historically experienced the highest levels of anti-Semitism are economically worse off, new research shows.

A synagogue burned during Kristallnacht in Ober-Ramstadt, Germany, 1938 (U.S. Holocaust Memorial Museum)
A synagogue burned during Kristallnacht in Ober-Ramstadt, Germany, 1938 (U.S. Holocaust Memorial Museum)

Videos of white nationalists chanting “Jews will not replace us” surely startled anyone who thought anti-Semitism long dead in the America of 2017. But for others it simply confirmed that old prejudices die hard.

Pogroms and attacks on Jews date back to Roman times. But it was in the Middle Ages, when the Church banned Christians from lending money for interest, that Jews took on disproportionate roles in banking and finance. Later, persecution flared at times of economic anxiety, a sentiment some scholars have described as “economic anti-Semitism.”

Today Jews still remain associated with financial services. Financial Times columnist Gideon Rachman wrote in September 2017 that philanthropist George Soros, because he is Jewish, is “easily cast in the role of the shadowy and manipulative international financier.”

A new paper looks at lingering resentments in Germany and finds that families living in counties with a history of anti-Semitism today are less likely to invest in the stock market. That is costly because, as other research has shown, holding stocks is associated with growing wealth in the long run. “Hatred against Jews in the past reduces not only the long-term wealth of the persecuted, but of the persecutors as well,” the authors write.

An academic study worth reading: “Historical Antisemitism, Ethnic Specialization, and Financial Development,” a working paper for the National Bureau of Economic Research, 2017.

Drawing on a diverse assortment of data measured across hundreds of years in Germany, such as access to banking services and local anti-Semitism, a team led by Francesco D’Acunto of the University of Maryland measures “present day regional differences in financial development.”

To isolate anti-Semitism by county, the authors establish a number of proxies: They look for the presence of a Jewish community before the year 1300 (92 percent of counties) and for confirmed pogroms associated with the Black Death (54 percent of counties), a plague that spread across Europe around 1349 and for which Jews were widely blamed. During the years leading up to the Holocaust of World War II, they look for vandalized synagogues, votes for anti-Semitic parties and anti-Jewish pogroms. They also use surveys from 1996 and 2006 that assessed German attitudes toward statements like: “Jewish people living in Germany should have the same rights as Germans in every respect.”

Key takeaways:

  • German households in counties where historical anti-Semitism was more pronounced are less likely to use banking services or to keep their savings in a bank, though their access to banking services are no different than in other counties.
  • Families in counties with higher rates of historical anti-Semitism are less likely to have a mortgage, though they are no less likely to own a home.
  • Present-day anti-Semitism and ownership of stocks are negatively associated: In other words, someone who holds anti-Semitic beliefs is less likely to own stocks.
  • Households in counties that saw anti-Semitic pogroms around the Black Death in 1349 are today about 12.5 percent less likely to own stocks.
  • Households in counties where historical anti-Semitism (expressed both in 1349 and the early 20th century) was one standard deviation higher than the mean are about 9 percent less likely to hold stocks. This difference, the authors note, compares to the difference in stock market participation between someone with a college degree and someone without the degree.
  • A one standard deviation increase in historical anti-Semitism is associated with an 8-percentage point drop in trust of local banks.
  • Present-day distrust in finance is higher in counties with historically higher anti-Semitism.

Robustness tests:

The authors test several potentially confounding factors.

  • Could persecution of Jews in the past have reduced the availability of local financial services today? “We find no systematic association between the ratio of Jews in finance … and present-day stockholdings.”
  • Could the persecution of Jews have reduced the availability of quality banking or financial services? For this, the authors assessed the efficiency of the local banking sector today: “Across the board, we fail to detect any systematic association between historical anti-Semitism and the present-day efficiency of the local banking sector.”
  • Perhaps people distrusted finance first, which caused anti-Semitism after Jews became highly represented in financial professions. The authors cannot rule this out completely, but believe it is unlikely because Christian banking families were not persecuted when they arose in the late Middle Ages. Plus, in Muslim lands in the Middle Ages, when Islamic leaders forbade Muslims from charging interest on loans, Jews assumed the same financial jobs. But they saw far more tolerance than they did in Europe.

Helpful resources:

Scholars Nico Voigtländer and Hans-Joachim Voth have done some of the most widely cited work on the origins of anti-Semitism in Germany. For a look at anti-Semitic beliefs among the generation educated by the Nazis, see their 2015 paper in The Proceedings of the National Academy of Sciences. This 2012 paper in The Quarterly Journal of Economics looks at Medieval origins.

This 2017 paper in The Economic Journal finds an association between cooler growing seasons and persecution of Jews in Europe between 1100 and 1800.

A 2017 ProPublica investigation found Facebook’s algorithms had learned to target advertisements at people self-identifying as “Jew haters.” The algorithms learn based on what they see online.

Factoid: By the 1880s, according to a contemporary account cited by D’Acunto and his colleagues in the paper profiled above, 3 percent of German workers were Jewish, yet Jews accounted for 23 percent of the finance sector and 85 percent of the traders on the Berlin stock exchange.

About The Author