The Invisible Cushion

There is a question that economists have been circling for decades but rarely state plainly: why do some peoples bet big while others hedge everything? The answer matters more than most policy debates, because a society’s appetite for risk determines whether it builds or merely preserves.

Israel, by almost any measure, is one of the most risk loving societies on earth. Among the highest venture capital per capita in the world. The fourth largest national presence on NASDAQ, behind only the United States, Canada, and China. A defence establishment that routinely takes tactical gambles that would paralyse larger, more cautious militaries. The standard explanation is cultural: chutzpah, necessity, the frontier mentality of a small state surrounded by hostile neighbours. All of this is true, but it is also incomplete.

The deeper explanation lies in what the behavioural economists Elke Weber and Christopher Hsee identified in the late 1990s. Studying financial decision making across cultures, they found that Chinese participants were consistently more willing to take risks than Americans. The reason was not recklessness. It was the opposite. In collectivist societies, extended family networks function as a safety net so reliable that the effective cost of failure drops. You can afford to gamble when you know your cousin will not let you sleep on the street. Weber and Hsee called this the cushion hypothesis.

Apply this to Israel and the logic is striking. Israeli society is not collectivist in the East Asian mould, but it possesses something functionally equivalent: a density of social bonds forged under pressure that few Western democracies can match. Three years of mandatory military service creates networks that last a lifetime. The reservist system means that a tech founder and a taxi driver may have shared a foxhole in Lebanon. The country is small enough that two degrees of separation is the norm, not six. This is not the atomised individualism of London or Los Angeles. It is a society where failure carries a social cost low enough to make the next bet rational.

The contrast with Europe is instructive. Geert Hofstede’s uncertainty avoidance index, the standard measure of how much a culture resists ambiguity, places Greece, Portugal, and Belgium near the top. These are societies that favour rules, procedures, and predictability. They produce excellent civil servants and cautious regulators. They do not, on the whole, produce many founders willing to stake everything on an unproven idea. The pattern linking high uncertainty avoidance to low entrepreneurship rates recurs across dozens of countries in the cross national data.

But here is where the argument gets interesting, and where Israel’s Abraham Accords partners enter the picture. The Gulf states present a paradox. Their societies score high on Hofstede’s index, well above the United States or Britain. Rules, hierarchy, and long established custom create populations that are, by Hofstede’s measure, deeply uncomfortable with ambiguity. Yet their ruling families have historically made enormous, concentrated bets: on oil, on sovereign wealth, on entire cities built from sand. The cushion in this case is not a collectivist family network but something more vertical: the implicit guarantee of a wealthy state that will absorb the downside.

This convergence of risk loving cultures may be one of the underappreciated engines of the Abraham Accords. The conventional analysis focuses on shared security concerns about Iran. That is real. But beneath the geopolitics lies a temperamental affinity. Israeli founders and Emirati sovereign wealth funds speak a common language that has nothing to do with Arabic or Hebrew. It is the language of people who regard uncertainty not as a threat to be minimised but as a space in which to operate. The early results bear this out: bilateral trade has grown far faster than the diplomatic frameworks predicted, driven as much by private actors who recognised a kindred appetite for the new as by the government frameworks that enabled it.

The danger, as always, is in overstating the case. Culture is a statistical tendency, not a destiny. Within any society, the variance between individuals dwarfs the variance between national averages. There are cautious Israelis and reckless Greeks. The research describes populations, not people. And culture is not fixed. Japan, which scores among the highest on uncertainty avoidance, produced one of the most extraordinary risk taking industrial transformations of the twentieth century. China’s relationship with financial risk has shifted dramatically in a single generation.

Nor should risk loving be confused with wisdom. A society that bets big also loses big. Israel’s tech sector has produced spectacular failures alongside its unicorns. The Gulf’s megaprojects include white elephants that no amount of sovereign wealth can redeem. The cushion absorbs the fall, but it does not eliminate it.

Still, in a world that increasingly rewards speed, adaptation, and tolerance for failure, the societies that treat risk as a resource rather than a hazard hold a structural advantage. The question for the cautious nations of Europe, and for the international institutions built in their image, is whether they can learn to tolerate the discomfort.

Somewhere in Brussels, a committee is drafting a regulation to ensure that no one has to. The room is full of experts. The entrepreneurs left hours ago. The chairs are still warm, but the room is already empty.