Franco Modigliani – economist

Writer and professor developed theories about spending and saving

Franco Modigliani studied in Rome
before emigrating to America

Nobel prize winner Franco Modigliani, who was an originator of the economic life-cycle hypothesis that attempts to explain the level of spending in the economy, was born on this day in 1918 in Rome.

He wrote several books outlining his economic theories, became a professor at three American universities, and received the Nobel Memorial Prize in Economics in 1985. 

Modigliani also formulated the Modigliani-Miller theorem for corporate finances, which is based on the idea that the value of a private firm is not affected by whether it is financed by equity or by debt.

Born and brought up in a Jewish family, Modigliani enrolled in the Faculty of Law at the Sapienza University of Rome at the age of 17. In his second year at Sapienza, his entry in a national economics contest won first prize and he was presented with it by the Fascist dictator, Benito Mussolini.

Modigliani went on to write essays for the Fascist magazine Lo Stato, displaying an inclination for the fascist ideals that were critical of liberalism at the time.

He argued the case for socialism in an article for the magazine about the organisation and management of production in a socialist economy.

But after racial laws were passed in Italy in 1938, he left Rome, with his girlfriend, Serena Calabi, whose father was a prominent opponent of Mussolini, to join her parents in Paris.

The neoclassical main building of the Massachusetts
Institute of Technology - Modigliani's base for many years

He returned to Rome to discuss his thesis and obtain his diploma in 1939, but afterwards went back to Paris.

Later that year, Modigliani emigrated with his girlfriend’s family to the United States, where he enrolled  at the New School for Social Research in New York. The PhD dissertation he submitted there was judged to be ‘ground breaking’.

Modigliani taught at Columbia University and Bard College in New York between 1942 and 1944 and became a naturalised citizen of the US in 1946. He later taught at the University of Illinois and Carnegie Mellon University before becoming an Institute Professor at the Massachusetts Institute of Technology (MIT).

He developed the hypothesis that consumers aim for a stable level of consumption during their lifetime by saving during their working years and spending during their retirement. Economists believe this was an original theory when he introduced it in a paper written in 1954. 

Modigliani also introduced the concept of the NIRU, the non-inflationary rate of unemployment, which referred to the level of unemployment, below which inflation rises, which he believed should influence policy decisions.

Modigliani in 2000: he continued
to teach well into his 80s

Modigliani married Serena Calabi in 1939 in Paris and they had two children, Andre and Sergio. 

With Leah Modigliani, his granddaughter, who followed him in becoming an economist, he developed the Modigliani Risk-Adjusted Performance, a measure of the risk-adjusted returns of an investment portfolio.

His Nobel prize was awarded to him for his pioneering analyses of saving and financial markets and in the same year he received MIT’s James R Killian Faculty Achievement award. 

In 1997, he received an honoris causa degree in Management Engineering from the University of Naples Federico II.

Modigliani became a trustee of the Economists for Peace and Security organisation and was an influential adviser to the Federal Reserve, designing a tool to guide monetary policy in Washington.

A collection of Modigliani’s economic papers is now housed in the Duke University’s Rubenstein Library in Durham, North Carolina.

Modigliani died in 2003 at the age of 85 in Cambridge, Massachusetts, where he taught until the last six months of his life.  Two years before his death he had written about his life as an economist in his autobiography, Adventures of an Economist.

Marcello Piacentini's modern campus at the
Sapienza University of Rome

Travel tip:

The university Franco Modigliani attended in Rome is often known simply as La Sapienza, which means ‘the wisdom.’  It can trace its origins back to 1303, when it was opened by Pope Boniface VIII as the first pontifical university. In the 19th century the University broadened its outlook and a new campus, designed by Urban theorist and architect, Marcello Piacentini, was built near the Termini railway station in 1935. Rome University now caters for more than 112,000 students.

The Via della Conciliazione, also designed by
Marcello Piacentini, frames St Peter's Basilica

Travel tip:

Architect Marcello Piacentini studied arts and engineering in Rome and afterwards worked for the Fascist Government. He developed a simplified neoclassicism which became the mainstay of Fascist architecture and as well as designing the new campus for  La Sapienza, he was responsible for the redesign of the road approaching St Peter’s in Rome, Via della Conciliazione. Roughly 500m long, Via della Conciliazione connects St Peter's Square to the Castel Sant'Angelo on the western bank of the Tevere (Tiber) river. A great many buildings, many of them residential, had to be requisitioned and demolished to create space for the road, which was constructed between 1936 and 1950 as the primary access route to St Peter's Square.

Also on this day:

1466: The birth of music printer Ottaviano dei Petrucci

1511: The birth of sculptor and architect Bartolomeo Ammannati

1943: The birth of actress, singer and TV presenter Raffaella Carrà

1946: The birth of football manager Fabio Capello

1952: The birth of actress Isabella Rossellini

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Roberto Saviano - writer and journalist

Author of ‘Gomorrah’ who lives under police protection

Roberto Saviano has lived under police guard since
writing his groundbreaking Mafia exposé, Gomorrah

The author and journalist Roberto Saviano, whose 2006 book Gomorrah exposed the inner workings of the Camorra organised crime syndicate in his home city of Naples, was born on this day in 1979.

Gomorrah was an international bestseller that was turned into a film and inspired a TV series, bringing Saviano fame and wealth.

However, within six months of the book’s publication, Saviano had received so many threats to his life from within the Camorra that the decision was taken on the advice of former prime minister Giuliano Amato to place him under police protection.

Some 12 years later, he remains under 24-hour police guard.  He travels only in one of two bullet-proof cars, lives either in police barracks or obscure hotels and is encouraged never to remain in the same place for more than a few days. His protection team includes seven bodyguards.

Saviano has written three more books including a collection of his essays and Zero, Zero, Zero - an exposé of the cocaine trade. His latest, published this week, is called The Piranhas. Whereas Gomorrah and Zero, Zero, Zero were non-fiction, The Piranhas is a novel, though one set in Naples with the Camorra at the centre of the story.

Yet Saviano has complained that, although he has so far avoided being killed, he has no real life. In an interview with an English newspaper, he said that since he was placed under guard he has not boarded a train, ridden a Vespa, taken a stroll or gone out for a beer.  He has admitted that if he had known the consequences, he probably would not have written Gomorrah.

Born the son of a Naples doctor and a mother originally from Liguria, Saviano attended the University of Naples Federico II, where he obtained a degree in psychology.  He began his career in journalism in 2002, writing for numerous magazines and daily papers, including the Camorra monitoring unit of the Corriere del Mezzogiorno.

His inspiration for writing Gomorrah came from his own experiences in the province of Caserta, where he grew up, which witnessed a gang war as rival Camorra groups battled for control of territory.  Violence on the streets became an almost daily occurrence in full view of ordinary citizens, some of whom became victims themselves when, occasionally, an innocent person was mistaken for a target.

Saviano’s journalism meant that he became acquainted with workers in businesses run by the Camorra, and in time with messengers and look-outs who worked for the clan. He pored over court records, news reports and trial transcripts, eventually pulling together all his knowledge to write Gomorrah.

Roberto Saviano signing a copy of
one of his books

Its focus is city of Naples and the towns of Casal di Principe, San Cipriano d'Aversa, and the territory around Aversa known as the agro aversano.  It describes how criminal bosses lived in sumptuous villas while burying toxic waste in the surrounding countryside with no regard for the health of the local population, many of whom were protective of Camorra activities not only out of fear but of distrust of legitimate authorities.

Saviano revealed details of the System - as the Camorra refer to themselves - never before brought to the public domain. It is written in the style of dramatic fiction but describes events that, Saviano says, actually happened.

This is supported by the reaction of the Camorra, who felt the book revealed details that compromised their activities. The last straw was probably an anti-Mafia demonstration in Casal di Principe in September 2006, when Saviano publicly denounced the bosses of the Casalese clan, Francesco Bidognetti and Francesco Schiavone, both of whom were in prison, as well as the the two ruling bosses at the time, Antonio Iovine and Michele Zagaria, insulting them and calling on them to leave Italy.

After threats to Saviano and members of his family were investigated by the Naples police, Amato, then Minister for Interior Affairs, assigned Saviano a personal bodyguard and moved him from Naples to a secret location.

Saviano makes speaking engagements around the world,
campaigning against organised crime

Two years later, after the informant Carmine Schiavone, cousin of Francesco Schiavone, revealed to the authorities that the clan had planned to eliminate Saviano and his police escort with a bomb under the motorway between Rome and Naples, Saviano announced his intention to leave Italy.

For obvious reasons, no one outside his immediate circle knows where he now lives. However, he makes public appearances at speaking engagements and is still writing regularly for many newspapers and magazines at home and abroad, including l'Espresso, la Repubblica in Italy, The Washington Post and The New York Times in the United States, Die Zeit and Der Spiegel in Germany, and The Times and The Guardian in the United Kingdom.

In 2008, six Nobel Prize winners  - Dario Fo, Mikhail Gorbachev, Günter Grass, Rita Levi-Montalcini, Orhan Pamuk and Desmond Tutu - launched a joint appeal to the Italian government to do more to defeat the Camorra and to support citizens such as Saviano in speaking out against them.

The incredible sloping watercourse is one of the features
of the Royal Palace in Caserta

Travel tip:

The biggest attraction for visitors to Caserta is the former Royal Palace - Reggia di Caserta - which is one of the largest palaces in Europe, built to rival the palace of Versailles outside Paris, which was the principal residence of the French royal family until the French Revolution of 1789. Constructed for the Bourbon kings of Naples, it was the largest palace and one of the largest buildings erected in Europe during the 18th century and has been described as "the swan song of the spectacular art of the Baroque”.

A typical street scene in the Quartieri
Spagnoli in the heart of Naples

Travel tip:

The area that used to be seen as a notorious Camorra stronghold, the Quartieri Spagnoli - Spanish Quarters - to the north of Via Toledo, is now much less threatening. The area consists of a grid of around narrow 18 streets running south to north by 12 going east to west towards the harbour. It represents a flavour of old Naples, with lines of washing strung across the narrow streets and lively neighbourhood shops catering for the residents, who number about 14,000. Although it is a poor area blighted by high unemployment, the Camorra are less visible here now than in some of the city’s run-down suburbs. The area takes its name from its original purpose in the 16th century, which was to house Spanish garrisons, whose role was to quell revolts from the Neapolitan population.

More reading:

How the capture of Camorra boss Paolo di Lauro struck at the heart of crime in Naples

The Camorra bride who became a mob chieftain after avenging the death of her husband

Dario Fo - the playright who sought out corruption in high places

Also on this day:

1929: The birth of motorcycle world champion Carlo Ubbiati

1958: The birth of singer Andrea Bocelli


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