Essays on the Economics of Organized Crime and Networks

This thesis contains four essays on the economics of organized crime and the empirical analysis of social networks. 

The first chapter provides a review of the recent economic literature on the impacts of organized crime on elections, and on public policies. Politicians indeed represent a major target for criminal organisations as they shape political decisions and policy implementation. The review discusses two central challenges characterising the literature, namely the measurement of organized crime and its potential endogeneity.

The second chapter argues that higher electoral competition may reinforce the position of politically active criminal organizations, which can endorse politicians in exchange for favors. The paper formalizes this intuition and test it on Italian electoral data, using the 1991 electoral reform as an exogenous source of variation in electoral competition in one of the two branches of the Parliament. A series of triple-difference and differencein-differences estimates suggest that, after the reform, mafia-prone areas reported higher vote shares awarded to the party traditionally supported by criminal organizations and a larger dispersion of votes across candidates of the same party.

The third chapter applies Network Analysis (NA) to study the interactions between criminal organisations and the wider society by analysing the connections between mafia members and the political, economic and social elites (e.g., politicians, public officials, policemen, entrepreneurs) in Sicily, the homeland of the Sicilian mafia. The analysis is based on a novel network dataset built by encoding information coming from the archive of the Italian Anti-mafia Commission, describing relationships of collusion and exchange of favours. So far, the application of NA has been limited to the relationships within criminal networks. This paper moves a step further as it also considers the interactions between mafia members and individuals belonging to the social, political and economic elites. The study analyses the “topological” role of mafia bosses, and shows that mafia bosses strategically position themselves in the social network as an interface between the criminal and the legitimate world.

Finally, the fourth chapter studies peer effects in the consumption of cultural activities by exploiting a unique individual-level longitudinal dataset on daily museum visits made by cardholders in the metropolitan area of Turin, in Northern Italy, between 2012 and 2019. The underlying peers’ structure is represented by a network in which cardholders are connected on the basis of information about the exact time and location of their visits.