Thursday, January 6, 2011

The Market for Lemons

I spent New Year on the island of Ischia, in the Gulf of Naples. Apart from the natural beauty of the place and its weird array of volcanic tricks (hot water in the sea in January, water sources with allegedly miraculous powers), it set me thinking of the limitations of mainstream social science.

The first point is that, by any of the usual indicators used to measure quality of life (and many are published and eagerly consumed in Italy), the province of Naples is an economic, social and political disaster zone. Most of the injuries (and often deaths) occurring during New Year celebrations in Italy happen in Naples and around. Rubbish is not collected, and when it is, very often toxic waste finds its way into illegal landfills in densely populated areas. Unemployment is high, average income low. However, anyone with a garden can grow fabulous lemons and oranges. But still, is that enough to compensate for the very obvious - often tragic - problems?

All of this poses a paradox because Naples is one of the most densely populated areas in Europe. People have flocked there from around the rest of Southern Italy for generations, and houses have been built (usually illegally) most of the way up the brooding and potentially deadly Vesuvius volcano. So, if life there is so bad, why do people stay? Are Neapolitans too stupid to realize a better life lies elsewhere? This seems unlikely, as Neapolitans are famed for their wit and reluctance to be fooled - 'cca' nisciuno e' fesso'.

So, we have a paradox on our hands. I can't pretend to have any compelling answers, but... how about the fruit? Of course, the lemons made famous by Akerlof are if anything more of a problem here than anywhere, with lack of social trust at unmatchable levels (a point made by Putnam two decades ago). But, citrus fruit may still tell us something. What is a lemon worth? In Naples, it can be as near to free as you get, and will taste incomparably better than any 50p lemon bought in a Northern Italian supermarket.

So do people stay because of the fruit? Well, probably not, but food is important to Italians, and many Neapolitans with very low incomes live on wonderful food at low prices. That's the utility side of it. But fruit also evokes the emotional attachment people have with the territory - the well known Neapolitan song Turna a Surriento famously cites the smell of the oranges that grow as abundantly as lemons in the province.

All of this is as soft as social analysis gets. But these days Neapolitans are more likely to stay and grind out a meagre living than earn European-style wages in the cold, fog-bound North of Italy. There must be a reason for this, and until someone comes up with something better than my citrus fruit theory of economic mobility, I'm sticking with it.