In the 19th century, as the US population was expanding westward, Jewish immigrants and their children played an important economic role in moving supplies via merchant channels. Relative to their numbers in the population, Jews were disproportionately represented as peddlers and merchants. Prof. Colleen Haight, an associate professor of economics at San Jose State University, returns to the program to discuss this phenomenon and how it relates to the economics of religion.
After a bit of introductory chat about how Prof. Haight stumbled on this project, rituals, and her aunt’s oyster stew, our conversation about Jewish merchants begins with a rather odd and seemingly unrelated topic — used car lemons. Nobel Laureate George Akerloff’s famous “lemons problem” will become an important foundational point for Colleen’s argument about Jewish peddlers. Akerloff used the selling of used cars to highlight what is known as an asymmetric information problem in economics. While the seller of a used auto knows the various problems the car has, the buyer is uncertain whether or not the information about the car is correct or not. If no trust can be established between the buyer and seller, such economic transactions are likely to break down. We then discuss various solutions to this problem including, and most importantly, the role that reputation and investments in one’s trustworthiness makes.
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