Behind Your Surname
Topic: Pearls of Wisdom
June 17, 2016
Image used with permission: iStock/scaliger
Behind Your Surname
The wealthy in Florence today are the same families as 600 years ago.
Italian surnames are highly regional and distinctive which allowed two economists from the Bank of Italy to compare the 2011 income and tax data of certain families, to the income of those same families in 1427. The economists discovered a statistically significant relationship between an ancestor’s surname and the occupation, income and wealth of their descendants today.
Their research challenges the commonly held view of most scholars who have studied intergenerational mobility that the economic advantages and disadvantages of ancestors vanish in about two to three generations.
It’s no surprise that wealth can be inherited or that one’s parents play a large role in determining your social status. Still, the length that Florentine families have remained high status is remarkable.
Consider, in 1427, the Renaissance masters Leonardo da Vinci and Michelangelo had not been born. Florence would go from rule under the Medici family, to a Republic, back to the Medici. The city would fall to the Holy Roman Empire following the 10-month Siege of Florence. The Medici line would go extinct, the city would be taken over by Napoleon. It would lose its role as the head of a city-state to become part of the Kingdom of Italy, under Rome. The fascist dictator Benito Mussolini would rule from 1922 to 1943, followed by a Nazi occupation of Florence. Following the war, the city would undergo a period known as the “miracolo economic italiano” — the Italian economic miracle — with GDP growing more than 8% a year. Per capita GDP would grow more in this period than in the entire five centuries from 1400 to 1900.
But (the economists) note their research is not focused on the super elite at the top 1% of income. Their finding is for the overall population. The entire top 33% of the income distribution in 1427 is likely to be wealthier today. This is a far broader group than Medici princes and dukes, with castles and estates to hand down through the centuries. This suggests that some 25 generations later, the hundreds of descendants of comfortable — but far-from-regal — leathermakers are likely to be doing quite well, and it’s not because they inherited great(x25)-grandpa’s shoes and belts, let alone his palaces.
The researchers argue that their findings can be thoughtfully extended to other advanced countries of the Western Europe, as Florence does not seem a unique case in terms of economic development and inequality.
The most common way to measure the correlation between a parent’s status to a child’s adult status is through intergenerational income elasticity. If income elasticity was 1 then all poor children would become poor adults and all rich children would become rich adults. Current elasticity estimates broadly range from under 0.2 in Scandinavian countries to almost 0.5 in Italy, the UK and the U.S.
So how does Canada compare to its peers on income mobility? According to the Conference Board of Canada we have earned an “A” and rank 4th of 13 peer countries with an income elasticity of only 0.19.
Paraphrased from a May 19, 2016 Wall Street Journal article titled “The Wealthy in Florence Today are the Same Families as 600 Years Ago” by Josh Zumbrun, and the research paper “What’s your (sur)name? Intergenerational Mobility Over Six Centuries“ by Guglielmo Barone and Sauro Mocetti published on the website VOX.