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Measuring Wellbeing: A History of Italian Living Standards

Author(s):Vecchi, Giovanni
Reviewer(s):Focacci, Chiara Natalie
Incerpi, Andrea
Ramazzotti, Andrea
Pala, Giovanni Maria
Molteni, Marco

Published by EH.Net (July 2017)

Giovanni Vecchi, Measuring Wellbeing: A History of Italian Living Standards. New York: Oxford University Press, 2017. xvii + 645 pp., $99 (hardback), ISBN: 978-0-19-994459-0.

Reviewed for EH.Net by Chiara Natalie Focacci, Andrea Incerpi, Marco Molteni, Giovanni Maria Pala, and Andrea Ramazzotti.

Measuring Wellbeing offers a multidimensional, quantitative analysis of Italian living standards from the country’s unification in 1861 to the present day. In doing so, it goes beyond the misleading identification of living standards with strictly monetary indexes, broadening the focus to include measures of physical wellbeing and social indicators.  Giovanni Vecchi collaborates with eighteen scholars from a range of universities and research institutions to take stock of the latest research in their areas. Each chapter deals with a different dimension of wellbeing and is co-authored by Vecchi and other economic historians. All chapters include an appendix on sources and methodology. The book presents new as well as pre-existing estimates of welfare indicators at the national and regional level, and — when possible — puts these in international perspective. Many of the estimates are drawn from Vecchi’s previous book, In Ricchezza e in Povertà (2011). Measuring Wellbeing expands on and brings to the international audience the work done for the Italian edition.

As stated in the introduction, the book is not intended as a definitive work. It is instead a landmark which organizes for the reader the research conducted so far. It is a meticulous attempt to provide scholars with a sound, heterogeneous picture of the latest knowledge on the evolution of Italian living standards. Nonetheless, the book refrains from dealing with the “deep” causes underlying the measures it surveys. In this sense, it is conceived as a methodological work and a platform for future research.

The book has two souls. It will interest the Italianist as both an accessible introduction and an authoritative reference on living standards in Italy from a quantitative perspective. Equally though it should appeal to scholars interested in Italy as a case study for the analysis of wellbeing. It deals with the issues in a clear (at times pedagogical) way, making this book an ideal starting point even for students outside the boundaries of economics eager to approach the issue of living standards rigorously.

Perhaps Vecchi’s most significant contribution regards the innovative method of exploiting historical household budgets as a micro-data source to study poverty and inequality. Historical application of this approach was pioneered in Rossi, Vecchi and Toniolo (2001); a more recent assessment can be found in A’Hearn, Amendola and Vecchi (2016). The chapter on “Household Budgets” (chapter 13, whose coauthor is Stefano Chianese) presents a collection of almost 20,000 Italian household budgets from 1861 to present. This collection is part of the larger Historical Household Budgets Project (HHB: http://hhbproject.com/the-project).

The Italian Household Budgets Database (IHBD) includes both the typical statistics and surveys produced by institutions such as ISTAT (Italian Statistical Office) or the Bank of Italy, and documents from family archives, trade unions, cultural institutions, and personnel records of public and private employers. In the database, proper historical household budgets are also combined, controversially but interestingly, with so-called “synthetic,” hypothetical households. In addition to earnings and expenses, these sources provide micro-evidence also on other socio-demographic characteristics. The problem of such an ad hoc collection not being a representative sample is addressed using post-stratification techniques and census data to weigh observations appropriately.

IHBD is then employed as a basis for estimating monetary indicators of the distribution of wellbeing, such as inequality (chapter 8; with Nicola Amendola) and poverty (chapter 9; with Amendola and Fernando Salsano). Historical household budgets are also used in developing a novel indicator of vulnerability (chapter 11; with Mariacristina Rossi and Lucia Latino), assessing “how the living conditions of the Italians have been – and are still – conditioned by the presence of risk and uncertainty” (p. 416), i.e. the risk of falling into poverty.

Among other monetary indicators, the authors reconstruct national and regional estimates of income (chapter 7; with Alessandro Brunetti and Emanuele Felice), and wealth (chapter 10; with Luigi Cannari and Giovanni D’Alessio). A chapter on the cost of living (chapter 14; with Amendola) problematizes the issue of temporal as well as spatial price differences in a historical perspective, emphasizing how good price indexes are essential to getting accurate monetary indicators — especially in countries like Italy where regional disparities are substantial.

Producing original estimates or linking existing but scattered series, the authors address physical wellbeing by analyzing nutrition (chapter 1; with Marina Sorrentino), height (chapter 2; with Brian A’Hearn), and health (chapter 3, with Vincenzo Atella and Silvia Francisci). To further investigate non-monetary dimensions, the authors consider education (chapter 5; with A’Hearn), migration (chapter 6; with Matteo Gomellini and Cormac Ó Grada) and the human development index (chapter 12; with Amendola and Giacomo Gabbuti). An original exploration of child labor is provided in Chapter 4 (with Francesco Cinnirella and Gianni Toniolo).

Remarkably, the fourteen chapters are preceded by an introduction but not followed by a conclusion summarizing the main findings and trends. The work is indeed a kaleidoscope, from which no mosaic emerges: the tiles are given, but their arrangement is left to the interpretation and judgment of the reader. A reason for this choice can be discerned in the chapter on the Human Development Index. In this “non-conclusive conclusion,” a one-dimensional synthesis of wellbeing is strongly rejected by the authors, who regard a reductive summary of the complex picture of Italian living standards in the long run as both impractical and undesirable. This approach is at the same time the strongest and weakest point of the book.

One of the factors that makes it hard to give a summary overview of Italian living standards in historical perspective is the issue of regional disparities. Monetary indicators all reflect the long-lasting divide between the North and the South of the country. The chapter on income assesses the prevalence of the North-South divide relative to region-specific determinants of geographic variation since the 1930s, and identifies a short-lived period of convergence starting in the 1950s and driven by publicly funded development projects. Regional polarization looms large over inequality, poverty risk, the distribution of wealth, and the dynamics of vulnerability. At first glance, lagging regions appear to have fared better on non-monetary dimensions of wellbeing, as convergence was stronger for key indicators such as life expectancy and infant mortality. Closer scrutiny reveals that convergence, though real, was slow and subject to setbacks and reversals. The chapter on height provides a particularly close examination of the persistence of regional divides in a context of general progress. The analysis delivers a nuanced picture, where local economic conditions prevail over the efforts of national policymaking.

The book also casts light on the understudied effects of industrialization on the living standards of the Italians. Although they maintain a certain reticence, the authors argue that Italian industrialization was relatively benign. Such conclusion is sustained by findings presented throughout the book. For instance, after discussing alternative strategies, Vecchi, Amendola and Salsano settle on an Orshansky-type poverty line, which is absolute, but adapts to a changing economic and social context. On this basis they estimate a remarkable series of absolute poverty incidence for the whole post-unification period, finding that poverty fell almost continuously, except for short-lived spells that do not coincide with the decades of stronger industrialization. Moreover, the authors estimate that the growth effect almost always favored “a reduction in poverty,” while “the variations in income redistribution have always had an adverse effect on absolute poverty” (p. 368): the “growth effect” has largely offset this “inequality effect.”[1]. A “benign” industrialization also appears in the anthropometric data, as the average stature of the Italian population “never experience[d] any falls” (p. 58), which might be expected in “industrializing areas undergoing rapid urbanization” (p. 59). As a final example, child labor — whose incidence was extremely high in 1881 – “dropped quite sharply during the first stages of industrialisation (1881-1911)” (p. 154) and again during the “economic miracle” (from the 1950s to the mid 1960s), a pattern which contrasts with recent findings on other European countries.

Another general conclusion that seems to emerge is that the achievements of the past should not be taken for granted. On a number of indicators documented in the book (e.g. child labor, income, inequality) recent years have witnessed a partial reversal of the remarkable leaps forward of the post-war “Golden Age.” However, as the authors claim in the closing of the chapter on income: “caution is the watchword, here, since we lack a suitable temporal perspective in order to judge whether the malaise is temporary (albeit prolonged), reversible, or irreparable” (p. 289).

Vecchi’s Measuring Wellbeing is a brave study attempting to fill the gap within the Italian economic history literature on quantifying living standards. The concept of wellbeing is presented as multifaceted and the book also explores non-orthodox dimensions. Unfortunately, it is difficult for the reader to reach an all-embracing conclusion (especially without background knowledge of Italian history), but this is not the authors’ final aim, and this shortcoming is compensated by the relevant methodological contributions that this book presents. This is an innovative and important work and ought to interest both economists and historians — not necessarily just “Italianists.” With regards to Italy, it will soon become the standard reference on the topic of wellbeing, providing scholars with a springboard for their present and future research.

Note:

As defined by the authors, “The first is interpreted as the variation in poverty that would be observed if there were no variation in income distribution during the period concerned; the second effect is interpreted as the variation in poverty that would be observed if average income did not vary during the period” (p. 368).

References:

Brian A’Hearn, Nicola Amendola, and Giovanni Vecchi. 2016.  “On Historical Household Budgets,” Rivista di Storia Economica, issue 2: 137-76.

Nicola Rossi, Gianni Toniolo, and Giovanni Vecchi. 2001.  “Is the Kuznets Curve Still Alive? Evidence from Italian Household Budgets, 1881-1961,” Journal of Economic History, 61 (4): 904-25.

Giovanni Vecchi. 2011.  In Ricchezza e in povertà: il benessere degli italiani dall’Unità a oggi. Bologna, Italy: Il Mulino.

The authors of this review are students in the graduate program in Economic and Social History at the University of Oxford.

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Subject(s):Education and Human Resource Development
Historical Demography, including Migration
Household, Family and Consumer History
Income and Wealth
Labor and Employment History
Living Standards, Anthropometric History, Economic Anthropology
Geographic Area(s):Europe
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII