Our Gemara on amud beis states that there is something about the air of the Land of Israel that inspires wisdom.  What is this really about?  

From a psychological perspective, it is understandable that the sense of confidence, security and identity that comes with living unapologetically as a Jew in the Jewish homeland certainly can enhance all kinds of creativity and development. Rabbenu Bechaye (Shemos 25:39) actually says something similar about a healthy and growth producing atmosphere, but he was referring to it in a more ecological sense, in that literally the climate was optimal for human health and development, leading to intellectual growth. The Ramah in Toras Haolah (71:11) also says that the climate in Israel is balanced and helps develop a balanced character.  He goes further to suggest this is why a Nazir from outside Israel must re-do his nazirhood upon entering the land of Israel 

(This is a mystical divergence and amplification of the reason supplied in Gemara Nazir (19b-20a) which says the Nazir redoes his Nazirhood because lands outside of Israel are considered as impure as a cemetery, causing the entire inception of Nazirhood to be incomplete, see Mishna Nazir 3:5).  We see this commonly, that a later sage can add a mystical dimension or interpretation that is different than the Gemara, so long as it does not change halacha.)  

It is possible, had Rabbenu Bechaye and the Ramah been exposed to our modern terms that express identity and ethnic pride, they might have added those psychological and sociological factors. There is no Biblical term for “identity”.  True we have terms for self (Anochi), or something closer to core identity such as “nafshi” or “kevodi”, which in Tehilim’s lexicon implies some unique aspect of self contained in the soul (see Tehillim 30:13 and metzudas tzion), but none of these words capture the modern term of identity any more than the Biblical word chashmal means electricity.  

Rav Tzaddok (Sichas Malachei HaShares.1.9) explains that there is something about the climate in Israel that leads to a specific kind of wisdom and knowledge in being more able to recognize and see God and the Godly.  In a similar manner, but more specifically,  Likkutei Moharan (II:40 and 61:2) explains that what the eyes see generate understanding.  When the Torah describes the Land of Israel as having “God’s eyes constantly upon it” (Devarim 11:12), since God does not have eyes, it actually refers to the deepest function of seeing, which is literally in-sight. Therefore, that God is “looking” at Israel, by reflection allows Jews in Israel to know and see more about God. 

A final optimistic thought is expressed by Likkutei Moharan.  This spiritual dynamic which is most powerful in Israel, can also come about outside of Israel through creating and understanding Torah insights, and particularly via the mystical impact of the motion of the stylus writing Torah as it moves through the air. To the mystic nothing happens without impact. The waves of air that are disrupted actually contain the words of Torah, and so being in an atmosphere of Torah learning actually allows one to breathe in the residue.  This is not as far-fetched as it sounds. Consider that when we hear sounds, those are merely the vibrations of sound waves that reach our eardrum which correspondingly vibrates and is interpreted by our auditory nerves, caused by vocal cords or other vibrations, such as music   Therefore any place of intense study of Torah can have a similar effect as the atmosphere in Israel, because the air still contains some impression of the word of Torah.