As you might have noticed, Gimpel has a significant interaction early on with a rabbi. The rabbi tells Gimpel:

Better to be a fool all your days than for one hour to be evil. You are not a fool. They are the fools. For he who causes his neighbor to feel shame loses Paradise himself.

In other words, the rabbi seems to be saying that the fool isn’t actually foolish. Really, the fool is a good, decent person. Like Gimpel, the fool is trusting and helpful. It’s the people who take advantage of Gimpel—like the people who told him that his mom and dad have risen from the dead and are looking for him—that are the fools proper. They’re the ones doing bad deeds. They’re the people who are forsaking paradise.

As for how the rabbi’s words impacted Gimpel’s relationship to Elka, you might have noticed the pains Gimpel takes not to cause a row with her. Though he appears to catch Elka cheating on him many times, Gimpel doesn’t make a scene. It seems like he’s putting the rabbi’s words into practice. He doesn’t want to bring his neighbor—in this case, his wife and family—shame.

The rabbi’s advice on shame and fools seems to come full circle with Elka’s death. Remember, on her deathbed, Elka confesses to her unfaithfulness. She exclaims, “It was ugly how I deceived you all these years.”

Now, based on the rabbi’s logic, you could argue it’s Elka who’s the fool. She’s the one who fooled herself by thinking she could rack up deceptions with impunity. Meanwhile, Gimpel, the supposed fool, doesn’t seem so foolish by the story’s end. His serene, untroubled world view seems more wise than foolish.