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Speaker 1: Hello, and welcome to another edition of the ODL podcast.

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Speaker 1: I'm Tracey Alloway and I'm Joe wis So Joe. This

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Speaker 1: is the second edition of our very exciting, very necesarious money,

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Speaker 1: markets and Crime series. We're really starting the year on

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Speaker 1: a very u sort of dark and grim note. Earlier

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Speaker 1: in the year we talked about possibility of a bond

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Speaker 1: market crash, and now we're on this series of the

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Speaker 1: economics and markets of crime. But I'm really enjoying these

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Speaker 1: and I'm excited about today's episode. What are we going

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Speaker 1: to talk about? Well, so I'm just gonna ask, are

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Speaker 1: you I think there's m a general tendency for guys

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Speaker 1: in particular to be really into, um, the Mafia and

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Speaker 1: Mafia movies especially. Are you one of those guys who

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Speaker 1: kind of like worships the Godfather. Wouldn't say I worship

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Speaker 1: the Godfather. I really liked the Godfather movies. I also

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Speaker 1: The Sopranos was definitely one of my TV shows of

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Speaker 1: all time. So I wouldn't say I'm, like, you know,

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Speaker 1: an obsessive or anything, but I do find it to

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Speaker 1: be a very interesting topic and I like a lot

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Speaker 1: of the media surrounding it. Okay, so today I think

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Speaker 1: you'll like this topic in that kuse. So today we're

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Speaker 1: going to be talking about UM, the idea of education

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Speaker 1: and the economics of education and what role they play.

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Speaker 1: Is any in um being a good mafioso? I guess right,

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Speaker 1: because we know there's plenty of evidence that having a

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Speaker 1: good education in the non criminal world is probably helpful

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Speaker 1: for getting ahead, for making more money, for all kinds

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Speaker 1: of positive life outcomes. And there's a lot of ambiguity

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Speaker 1: about why is it just about signaling? Does anyone actually

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Speaker 1: learn anything in college that they use or is it

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Speaker 1: about something else? And so it's kind of an interesting

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Speaker 1: way to study the value of education by whether it

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Speaker 1: also helps you get ahead in the world of organized crime. Yeah,

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Speaker 1: but there's also the school of thought that says that

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Speaker 1: if you got a higher education, than you're less likely

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Speaker 1: to resort to crime. Right, So, like the idea of

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Speaker 1: gangsters actually actively seeking out education in theory maybe should

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Speaker 1: deter them from a life of crime. I don't know

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Speaker 1: if that's what we're going to find out, right, you think? So?

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Speaker 1: Of course there and there's you know, it's not the mafia,

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Speaker 1: but there's that famous moment in the show The Wire

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Speaker 1: where drug kingpin Stringer Bell is seen in an economics

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Speaker 1: class at the local college. So that's right, and he

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Speaker 1: learns about supply and demand demand curve. Right, that's a

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Speaker 1: great scene. Okay. So here with us to talk about

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Speaker 1: all of this is Giovanni Master Buoni. He is a

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Speaker 1: professor of economics at the University of A six and

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Speaker 1: he is also chair at the Collegio Carlo Alberto in Italy,

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Speaker 1: and he actually wrote a paper with some of his

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Speaker 1: colleagues called returns to Education in Criminal Organizations? Did going

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Speaker 1: to college help Michael Corleone? So? UM, clearly a Godfather reference.

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Speaker 1: Right there, let's do it. Giovanni, thank you so much

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Speaker 1: for joining us today. Thank you for having me. I mean,

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Speaker 1: I guess I have to start with, UM the obvious,

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Speaker 1: which is what inspired you to actually look at the subject,

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Speaker 1: because connecting education, uh and returns and college UM and

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Speaker 1: the mafia isn't necessarily something that a lot of researchers

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Speaker 1: will look into. UM. It was a book geography by Bonano,

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Speaker 1: who was one of the sort of leaders in the

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Speaker 1: Italian American mafia in New York in Brooklyn, and in

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Speaker 1: his autobiography, UM he talks about how having a sort

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Speaker 1: of a higher level of education than than his peers

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Speaker 1: within the mafia helped him to become one of the

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Speaker 1: one of the bosses of of of the of of

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Speaker 1: one of the New York families. Having already worked on

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Speaker 1: the on the Italian American mafia and having the data

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Speaker 1: that would somehow allow me to have a measure of uh,

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Speaker 1: sort of economic success and of of education sort of

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Speaker 1: made the trick. Before we get into this question of

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Speaker 1: whether they're having an education really helps one get ahead

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Speaker 1: in the mafia and why that might be, let's just

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Speaker 1: talk about the data first. How do you even begin

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Speaker 1: to measure something like this. How do you know which

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Speaker 1: of the mafio so went to college? And how do

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Speaker 1: you know how well they did economically? It's not like

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Speaker 1: their salaries are made public or anything like that exactly,

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Speaker 1: So it's it's not easy in this So I always

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Speaker 1: joke saying that the Mafiozzi are somehow the you know,

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Speaker 1: the the less likely to respond to surveys, which is

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Speaker 1: how we usually find out about how much money people

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Speaker 1: may and and and and what level of education they have.

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Speaker 1: So it all starts with some declassified uh, files by

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Speaker 1: the Federal Bureau of Narcotics, which was an agency UM

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Speaker 1: trying to track down the mafia way before the FBI did.

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Speaker 1: So we're talking about the nineteen fifties and sixties when

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Speaker 1: the FBI was busy, UM trying to find the communists

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Speaker 1: in the country. So what the Federal we of Narcotics

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Speaker 1: did was to UM sort of build uh like a

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Speaker 1: huge folder where somehow each page was dedicated to a mobster.

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Speaker 1: Now we don't know exactly how they managed to track

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Speaker 1: down so many mobsters. I mean most likely because there's

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Speaker 1: no evidence, but most most likely it was through undercover

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Speaker 1: agents and also monitoring these these mobsters whenever they met.

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Speaker 1: And so what you have in the in the in

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Speaker 1: the Federal GW of Narcotics files UM is information about

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Speaker 1: where these mobsters lived, so their place of residents UH,

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Speaker 1: the age, the name so first name and last name,

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Speaker 1: the closest associates UH and as well as like a

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Speaker 1: short description of their criminal profile. But not all of

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Speaker 1: them had a criminal profile, so some some were very

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Speaker 1: good in in in hiding and in hiding somehow from

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Speaker 1: the police. So this is so the file. The last

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Speaker 1: update happened in nineteen sixty of this of this of

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Speaker 1: this folder, and it was declassified in UM I think

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Speaker 1: in two thousand and seven or in two two thousands

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Speaker 1: and six or seven. So I I found out about

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Speaker 1: it um at UM. So I was waiting for for

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Speaker 1: an airplane, and there was a bookstore, and so I

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Speaker 1: started just looking at books and and it it turns

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Speaker 1: out that someone printed the whole folder and so you

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Speaker 1: can buy it on on Amazon UM and it's called

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Speaker 1: Mafia very simple. And and so what I did is I,

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Speaker 1: first of all, UM put the whole folders, so each

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Speaker 1: each file, each each mobsters information in electronic format, and

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Speaker 1: then UM sort of what was missing for this research

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Speaker 1: was information about their level of education as well as

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Speaker 1: a measure of economic success. So what I what I

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Speaker 1: what we did I mean with my authors is we

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Speaker 1: used the first name, last name, place of birth, and

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Speaker 1: date of birth to merge UM these mobsters with the

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Speaker 1: U S Census, the n U S Census and in

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Speaker 1: the ninete f the U S Census, you have UM

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Speaker 1: a whole lot of information including income, the value of

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Speaker 1: the house if they own the house, or the rent

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Speaker 1: they pay UM, as well as UH the years of education.

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Speaker 1: And so that allowed us to write this paper and

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Speaker 1: to measure returns of the education. And so what sense

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Speaker 1: did you get about how um I guess people um

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Speaker 1: that either we're in the mafia or we're going into

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Speaker 1: the mafia thought of education, like, did they see the

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Speaker 1: value in it? Was it obvious to them there is value?

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Speaker 1: Or what was their decision making process when they decided

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Speaker 1: to go off to college. So again, it's it's hard

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Speaker 1: to answer this question because we um, we only have

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Speaker 1: scattered information about that, and it's mainly coming from either

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Speaker 1: historians who typically talk about of individual cases or autobiographies

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Speaker 1: like for example, the one by Joe Bonana. The sense

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Speaker 1: is that they would spend as little time as possible

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Speaker 1: in school, and there are events, even stories of parents

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Speaker 1: trying to fake uh the age of of their children

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Speaker 1: to have them spent uh, you know, a fewer years

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Speaker 1: in school. So we are not arguing in the paper

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Speaker 1: that that they were actively seeking more education, but that

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Speaker 1: those that did have more education, we're actually um making

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Speaker 1: more money and we're living in in in a more

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Speaker 1: wealthy housing. Yeah. I was just going to get to

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Speaker 1: that point. You mentioned Joe Banano and he studied his

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Speaker 1: own education as a reason for his success. Uh, go

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Speaker 1: through what are the key data points? How much more

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Speaker 1: education translated into how much more money? In economic success?

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Speaker 1: What is what was the return not going to school?

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Speaker 1: So we use two economic outcomes UM. One is income.

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Speaker 1: Now income might be a little bit problematic, so for

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Speaker 1: one might think that even in in in in the census,

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Speaker 1: mobsters would be unwilling to declare exactly how much money

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Speaker 1: they make, and so we use UM also housing and

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Speaker 1: housing is somehow more difficult to hide because UM, the

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Speaker 1: surveyors would would would actually visit the homes of individuals

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Speaker 1: and and and so they could actually see and have

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Speaker 1: a sense of the value of the of the house.

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Speaker 1: You know, we argue that it would be more difficult

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Speaker 1: to hide the value of of the house where they

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Speaker 1: we're living or the rent that we're paying. So what

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Speaker 1: what we find is that having an extra year of

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Speaker 1: education increase increases their um their income as well as

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Speaker 1: the value of their housing by about seven percent, seven

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Speaker 1: to eight percent. And this sort of rate of return

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Speaker 1: is very similar to the rate of return of their neighbors.

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Speaker 1: Because what we do then is we we compare the

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Speaker 1: returns to education of mobsters with the returns to education.

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Speaker 1: Of the whole series of possible control groups, now the

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Speaker 1: more natural one, uh we think is is the one

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Speaker 1: based on their neighbors. So you have individuals who share

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Speaker 1: the same neighborhood, the same you know, they live in

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Speaker 1: the same city, they live even in the same neighborhood.

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Speaker 1: Uh And, and what we find is that neighbors have

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Speaker 1: very similar returns to education, maybe slightly larger by one

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Speaker 1: percentage point. Then we compare them to um US citizen

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Speaker 1: who are of similar age and and and similar gender.

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Speaker 1: I mean, again I should have mentioned this. We're talking

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Speaker 1: about only men. So the mafia was really a male business.

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Speaker 1: Women were not allowed into the or instill are not

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Speaker 1: allowed into the mafia and um and So, while it

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Speaker 1: is true that um U s citizens have have higher

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Speaker 1: returns of ulgation in those years so close ten to

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Speaker 1: eleven percent, when you compare the Mafiozzi to another quite

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Speaker 1: reasonable control groups, which are immigrants as well as immigrants

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Speaker 1: of Italian origin, these two groups fare much much worse.

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Speaker 1: So they have returns to education that are only half

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Speaker 1: as large as the ones of the mobsters. So, I mean,

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Speaker 1: what conclusions do you draw from your inclusion? What what

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Speaker 1: is the actual value of education here and do the

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Speaker 1: differences and results between mafia and non mafia people suggest

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Speaker 1: a different value for education, um, depending on whether it's

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Speaker 1: applied to criminal activity or not. So what we managed

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Speaker 1: to do in the paper, which I think pins down

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Speaker 1: a little bit the mechanism here is, um, we managed

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Speaker 1: to separate the mobsters into two groups. Uh. And that

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Speaker 1: that that that you know that we did thanks to

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Speaker 1: the Federal Bureau of Narcotics files. So we we divided

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Speaker 1: the mobsters into those that that we're doing more business

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Speaker 1: types of crimes UM, like for example, loan sharking or

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Speaker 1: money loan drink or drug dealing, UM, with those that

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Speaker 1: instead had a more viole and profile, like those that

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Speaker 1: were involved in robberies or killings, and and and there

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Speaker 1: we find striking differences. So those that have a more

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Speaker 1: business type profile have returned to education, which is similar

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Speaker 1: to the to the ones of the U S compuerlation.

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Speaker 1: So it's close to eleven UM, while those that, uh,

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Speaker 1: you know we're doing those that were so you know

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Speaker 1: called also the soldiers, have much much lower returns education,

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Speaker 1: like you know, close to two to three percent, so slow,

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Speaker 1: you know, similar to the to the ones of of

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Speaker 1: the other Italian immigrants. What was the highest level of

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Speaker 1: education that you encountered, um in your research? Did did

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Speaker 1: anyone have like a doctorate or something like that. Uh? No,

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Speaker 1: I think the highest was college degree. So what what

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Speaker 1: you find on average is that monsters have one less

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Speaker 1: year of education compared to their neighbors. So at that time, UM,

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Speaker 1: the average education is seven seven and a half years

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Speaker 1: for monsters and eight and a half years more or

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Speaker 1: less for their neighbors. So I alluded to this in

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Speaker 1: the intro. But you know, just talking about in the

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Speaker 1: non criminal economy, there's still quite a bit of debate

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Speaker 1: about why people with more education make more money. You

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Speaker 1: could say, well, you learned skills in college and that helps.

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Speaker 1: Or maybe it's a signaling mechanism to future employers that Okay,

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Speaker 1: this person who I'm going to hire, I'm going to

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Speaker 1: first just do a college screen and not hire anyone

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Speaker 1: who didn't go to college. Or maybe, and I think

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Speaker 1: you mentioned this in your paper, maybe there's a socialization

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Speaker 1: element where you don't really learn anything, but you learn

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Speaker 1: how to behave in a higher article organization. Or maybe

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Speaker 1: just the mere act of going to college tells you

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Speaker 1: something about the enroll lead that this person has preter naturally,

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Speaker 1: you know, they're smarter and more skilled than other people,

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Speaker 1: and so it's those not you know, they already had

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Speaker 1: what it took to succeed. You know, this debate about

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Speaker 1: why college is valuable goes on forever, and I don't

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Speaker 1: think there's a clear answer. Does the study that you

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Speaker 1: have undertaken by taking it outside of the sort of

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Speaker 1: corporate realm in your view, shed any light on this question.

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Speaker 1: That's a good question, uh, lest the truth, Like I

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Speaker 1: haven't thought about it, um, But I mean if you

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Speaker 1: take these potential mechanisms, uh, you know one at the time,

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Speaker 1: I think they are all they could they could all

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Speaker 1: be applied to the Italian mafia, you know, sort of

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Speaker 1: in the same way they can be applied to the

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Speaker 1: normal workers. And this is because this is not well known,

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Speaker 1: but the Italian mafia is is is somehow a democratic institution,

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Speaker 1: meaning that the members elect their boss. And so the

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Speaker 1: signaling value of education, my might you know, might work

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Speaker 1: in in in in such a set up in a

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Speaker 1: similar way it works for for employers and employees. Um.

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Speaker 1: Although I do think that what we find about business

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Speaker 1: type of crime criminals having much higher returns to education

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Speaker 1: does suggest that there's also some learning involved potentially uh,

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Speaker 1: better skills in when when when dealing with numbers for example,

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Speaker 1: that that that might valuable even in in inside the

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Speaker 1: you know, the criminal world. Well, I have to ask, um,

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Speaker 1: do we have any data on what exactly UM mafia

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Speaker 1: members were actually studying? Were they studying economics for instance?

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Speaker 1: You know that that unfortunately we don't know in the

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Speaker 1: in the in the census, we only know the years

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Speaker 1: of education, um, and and you know very few went

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Speaker 1: to college, so you know, we're so again the average

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Speaker 1: years of education is certainly a half years, so most

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Speaker 1: most uh, you know, I didn't go far farther than

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Speaker 1: than than than compulsory education. But I agree, I mean

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Speaker 1: that would be very interesting that there are um store

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Speaker 1: ease of modern Mafiuzzi in Italy, uh being having having

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Speaker 1: much higher levels of education than their parents. Right, that

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Speaker 1: was gonna I was just gonna ask this. You know,

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Speaker 1: there's organized crime exists today. You your study looked at

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Speaker 1: the first half of the twentieth century. Um, have people

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Speaker 1: or you undertaken similar studies on existing organized crime elements

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Speaker 1: to see if similar phenomena. Hold well, I would love to, um,

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Speaker 1: but it's just very difficult to get the data right.

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Speaker 1: On top of I think they're being a little bit

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Speaker 1: also of a of a of a risk factor probably.

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Speaker 1: Uh so, you know, we so in our data we

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Speaker 1: looked at mobsters that that were active in the forties,

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Speaker 1: fifties and sixties, so most of them are, if not dead,

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Speaker 1: they're very old and probably not very dangerous. UM. I

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Speaker 1: think it would be different if if we were looking

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Speaker 1: at at current mobsters and for current mobsters, UM, it's

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Speaker 1: it's just really hard to get the data. I mean,

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Speaker 1: for one thing, the census, recent census don't have information

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Speaker 1: on on on first names and last names. So even

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Speaker 1: if one managed to find the names of mobsters, for example,

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Speaker 1: had been involved in in in in in in in

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Speaker 1: recent crimes, I think it would be really hard to

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Speaker 1: find out exactly what kind of education they have because

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Speaker 1: that's simply not information that is typically of of of

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Speaker 1: use for for the police, and so it's not information

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Speaker 1: that the police records. All right. Giovanni must Booni. He's

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Speaker 1: a professor at the University of Essex and also a

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Speaker 1: chair at the Collegio Carlo Alberto. His paper is the

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Speaker 1: returns to education in criminal organizations? Did go into college?

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Speaker 1: Help Michael Corleone? Fascinating topic. We really appreciate you coming up,

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Speaker 1: Thank you, thank you. So So what um topic do

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Speaker 1: you think Michael Corleoni would have studied? I bet he

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Speaker 1: would have studied like a generic business degree, which, to

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Speaker 1: be honest, I never really understood what studying business was

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Speaker 1: in college business majors. I never do what that yeah,

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Speaker 1: or something like that, But I imagine something like that.

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Speaker 1: But maybe if I went back and rewatched The Godfather

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Speaker 1: specifically thinking on that, I would come up with some

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Speaker 1: other answer. Don't you think the degree I mean, granted

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Speaker 1: a lot of people in that study didn't go to college,

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Speaker 1: but then you think the degree that would have helped

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Speaker 1: then the most would be law, Like it has to

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Speaker 1: be law, right, Oh yeah, right, because in a way,

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Speaker 1: organized crime is sort of like legal arbitrage, finding opportunities

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Speaker 1: in the existence of day to day life where people

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Speaker 1: need to pay for some extra legal service like pretentions.

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Speaker 1: One I thought one of maybe the most fascinating element

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Speaker 1: is just the process of collecting data, And it seems

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Speaker 1: like a lot of really interesting economics comes out of

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Speaker 1: unusual data sets. Obviously, when the Federal Narcotics was assembling

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Speaker 1: these dossiers on mobsters, they weren't thinking that they were

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Speaker 1: creating a future economic data set. But a sort of

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Speaker 1: enterprising researcher can see them for what they are. So

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Speaker 1: you love the idea of economists doing um surveys of

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Speaker 1: criminals and asking them like, hey, uh, your level of

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Speaker 1: education and by the way, um, the returns on your business? Right,

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Speaker 1: if you don't mind, please let us also tell us

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Speaker 1: what your annual salary is in your bocus and your

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Speaker 1: take home pay from last year life. Uh yeah. But

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Speaker 1: as you rightly point out, like the notion that if

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Speaker 1: we could get that kind of data, what's fascinating stuff

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Speaker 1: it would yield. And again this is an important topic

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Speaker 1: of debate if you think that higher education should actually

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Speaker 1: deter people from crime. Um, for whatever reason or mechanism

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Speaker 1: that comes into play, these are really really interesting data

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Speaker 1: sets to have, absolutely, and I think also, you know,

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Speaker 1: there's just this cliche that you should go to college

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Speaker 1: and getting a better education is good for your career.

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Speaker 1: And so not only did we learn that that applies

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Speaker 1: to crime as well, which is interesting, but that you know,

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Speaker 1: for maybe some of the same reasons. The idea that

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Speaker 1: in the corporate world sort of pure credentialism could be

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Speaker 1: one reason why someone gets tired over another, and in

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Speaker 1: the criminal world, perhaps having a degree is something that

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Speaker 1: if everybody's voting, like this guy is the smart one,

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Speaker 1: he has a degree or he went to school, could

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Speaker 1: be a factor. And so some of these, um, you know,

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Speaker 1: might sort of further lend the argument that there is

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Speaker 1: some value, uh you know, some if nothing else signaling

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Speaker 1: value and having that degree. Okay, So I guess we

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Speaker 1: haven't definitively established if crime does pay, but education definitely

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Speaker 1: seems to write and well if and if we don't

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Speaker 1: know for sure if crime does pay. But if you

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Speaker 1: know that your child is going to go into a

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Speaker 1: life of crime, you can still suggest to them to

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Speaker 1: stay in school. Yeah, start saving for that college fund. Now, um,

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Speaker 1: all right, Well that's another edition of the off of podcast.

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Speaker 1: I'm Tracy Alloway and you can follow me on Twitter

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Speaker 1: at Tracy Alloway and I'm Joe Why Isn't All? You

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Speaker 1: can follow me on Twitter at the Stalwart and tune

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Speaker 1: in next week for the next edition of our money,

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Speaker 1: Markets and Crime series. The year to e