Take a tip from the Mafia: It pays to stay in school.

Mobsters with more education enjoy significantly higher earnings, according to a new paper that digs into the history of Italian American organized crime. Just one extra year in school has typically increased a gangster’s income by about 8 per cent.

The authors of the paper – Nadia Campaniello of the University of Essex, Rowena Gray of the University of California at Merced and Giovanni Mastrobuoni of the University of Essex – want to make it clear that they’re not recommending lives of crime for PhD students. But their research, presented Monday at the Royal Economic Society’s annual conference in Brighton, Britain, does shed surprising light on the real-world value of school. Among other things, their findings suggest that hours spent in the classroom do generate tangible benefits later in life. That holds true even if your chosen profession happens to be on the wrong side of the law, where nobody cares if you got an A in calculus.

“The study is really about the payoff from education,” Prof. Mastrobuoni said in an interview. “We found that the extra earnings related to more years of schooling were quite large, especially in more sophisticated areas of crime.” Gangsters who engaged in more cerebral forms of larceny – fraud, embezzlement, tax evasion and counterfeiting – enjoyed an income bump of approximately 16 per cent for each additional year of education, according to the new research paper, entitled, “Did going to college help Michael Corleone?”

The starting point for the study were files compiled by the U.S. Federal Bureau of Narcotics that contained details about hundreds of Mafioso, or Mafia members, operating in 1960. “The FBN was really the first law-enforcement agency to systematically study mobsters,” Prof. Mastrobuoni said. “Back then, the FBI was busy tracking down Communists.”

The researchers painstakingly matched up the criminals listed in the old FBN files with people listed in the 1940 U.S. census, resulting in a sample of about 300 mobsters. Thanks to the census information, they could compare the criminals’ education levels, declared incomes and home values (or rent paid) against those of their non-Mafioso neighbours as well as against each other.

This rich data set also offered ingenious ways to circumvent gangsters’ propensity for not declaring all their income. The researchers could use both housing quality and neighbours’ incomes as guides to what the Mafioso were probably pulling in.

Over all, the results were clear: An extra year or two of education was linked to higher incomes for mobsters – much more so than for Italian immigrants in the legitimate U.S. economy. However, the payoff from education varied widely depending on what types of crime a mobster specialized in.

The lower-level Mafioso – the knee-cap breakers and hit men in the FBN files – derived relatively low returns to education that were roughly in keeping with those of Italian immigrants in the legal economy. In contrast, so-called business criminals, who engaged in white-collar crimes such as fraud, loan sharking and gambling, enjoyed much higher paybacks.

“These results are very consistent with our narrative that mobsters have surprisingly high returns to education because of the complex nature of the crimes and criminal network they are involved in,” the authors write.

To be sure, the results are based on findings from an era where many people didn’t finish high school. Moreover, they date from a time when ethnic discrimination was rampant, limiting the potential payoff from education in the legal job market.

However, there’s no reason to think that the payoff from education has disappeared for criminals, especially for those who operate in highly centralized hierarchies such as the Mafia, the researchers say.

“Many of the skills students acquire at school are likely to be useful when setting up a racket (i.e. extracting the optimal rent), a loan sharking business (i.e. weighing interest against default risk), a drug dealing system (i.e. setting up supply chains), etc.,” they write.

The bright spot, at least for law-abiding citizens, is that other research indicates more education also reduces a person’s risk of pursuing a life of crime in the first place.

“I like to think that the preventive effect of education is stronger than the effect we’re measuring in this study,” Prof. Mastrobuoni said.

The Globe and Mail
Published Monday, Mar. 21, 2016 6:15PM EDT
Last updated Monday, Mar. 21, 2016 6:38PM EDT