EconTalk — Ran Abramitzky

On: The Mystery of the Kibbutz.

Episode: N/A

Date: October 2018

Background: Author of “The Mystery of the Kibbutz”.

Key Subjects:

  • The evolution of the kibbutz (communal farm) movement in Israel.
  • Issues that need to be addressed in order for a kibbutz to thrive:
    • Self-interest, lack of incentives.
      • Solutions: stability of job and income, form of insurance.
    • Adverse selection:
      • Solutions: select motivated individuals only.
    • Free riders:
      • Solutions: create small cohesive group with shared ideals, monitor and enforce norms (social sanctions, peer pressure, catch and punish cheaters).
    • Brain drain.
      • Solution: high exit costs (no savings, no private property, can’t take anything with you when you leave).
      • Solution: allows for more effective non-monetary appreciation (value of nurses, teachers, etc.), better alignment of skills and goals.
    • Lack of privacy.
    • Skills of individuals not always aligned with goals of kibbutz.
  • Importance of scale: concept of extended family, only works when people know each other.
  • Maximization of a different pie: allows for non-monetary incentives (such as social values) to be weighted as well.

Key Takeaways:

  • Small communities allow for better alignment of skills and goals.

Worth Listening:


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