There was once a rabbinic story I heard. God did not choose the Jews/Israel because they were better, more deserving, etc; rather, so goes the story: God offered His Torah to every group of people, but it was only the Jews who said “yes”. It isn’t that being Jewish is better than being non-Jewish in some ontological sense: it’s that Jews are the people who have said “yes” to the Covenant, and thus are chosen through that Covenant promise.
Now, I’m a Christian, so my take would be a bit different. Though I do appreciate the point the rabbi was making. As a Christian the chosenness of Israel is on account of one, single, human being: Jesus Christ.
Jesus is the Chosen One, and it is His chosen-ness that makes Israel chosen; for the Covenant was established, and even further back–to Abraham, because it was all about Jesus. This is why when we who are not Jews, but uncircumcised Gentiles, are brought in through faith we are also chosen. Chosen in Christ, no longer strangers (as St. Paul says) to the commonwealth of Israel.
This does get us to larger theological questions: Predestination, Election, etc. As a Lutheran I, obviously, confess the Lutheran Confessions–so I believe in the doctrine of Election–we are chosen in Christ, predestined in Christ. But this is not in the Calvinistic sense; nor is it in an Arminian sense. But yes, our Election before the foundation of the world, in Christ; and our chosen-ness in Christ (and thus Israel’s chosen-ness and election) are all threaded together.
The sort of stuff Paul really gets excited about when he gets into the big picture stuff throughout his letter to the Ephesians. Too often we (especially we Protestants) get hung up and stuck at Ephesians 2:8-9, where there is a lot going on in Ephesians. And the whole point of our being saved by grace through faith is less about “getting to heaven” and more about who we are, and what God has done and is doing, in history, in who we are in Christ, God’s purposes revealed in Christ (and in/through the Church of which Christ is Head). Of course “going to heaven” is because we are saved by grace through faith–but that’s just not what Paul is really getting at in Ephesians (big picture).
Try reading through the first chapter of Ephesians and not feel just how excited Paul is, how pumped he is, to get some really big theology.