by Carlotta S iniscalco (‘ 10) Carlotta Siniscalco is a senior at Wharton, concentrating in Finance and Entrepreneurship. She is from Milan, Italy.
Italy is part of the PIGS, that its Public Debt to GDP ratio is the highest in the European Union..
Are Italians really P.I.G.S.? I f you have ever lived in or visited Italy, you
The answer is simple: the official data
will have noticed that people there enjoy a
provides a very accurate picture of only the
quite high standard of life. In fact, Italians
official economy. It does not account for the
of every social class invest a considerable
GDP generated by “hidden” (illegal or non-
fraction of their disposable income on clothing
reported) economic activities.
and gourmet food; they also spend their six
While it is true that GDPs never include
available weeks of vacation in a location other
profits from illegal activities, Italian “hidden”
than their home; they own the most cars per
activities represent a larger percentage of
capita of than any other EU country (scooters
GDP than any other European country. Official
not included); and they have consistently
data cannot be adjusted for this discrepancy
enjoyed one of the lowest unemployment rates
and therefore simply ignores it. The result is a
in the European Union.
picture of the Italian economy that does not
fully coincide with reality.
conditions, it is not surprising to learn that
What are these clandestine activities and
Italy is one of the most popular countries
how do they constitute a bigger percentage of
for Americans to retire to and one of the
GDP than other EU countries?
top destinations on the American travelers
It is common knowledge that Italians
“wish lists”. As an Italian-born citizen who has
are naturally inclined to get around rules. It
also lived in other countries, both inside and
is part of their arte di arrangiarsi, the art of
outside of the EU, I am in complete agreement. Life in Italy is good.
Comparison: Italy and the EU
Italy is part of the PIGS, that its Public Debt to GDP ratio is the highest in the European
Union and that a fourth of the Italian adult
population apparently has no income.
Debt / GDP
At-risk of Poverty Rate*
How can this be possible? Where is the trick? Are the numbers lying? Is it really the case that 1 in 4 Italians has no disposable income? How could I have failed to notice how serious Italy’s economic situation really was?
S PRIN G 2 0 1 0
* At-risk of poverty rate after social transfers
The Spring 2010 edition of the IBR.