“A wiseguy sees things if there are wiseguy things to see,” wrote Joe Pistone, the FBI agent better known as Donnie Brasco – the name under which he managed to infiltrate the mob. But what are the wiseguy things to see? And how is a wiseguy to know he isn’t dealing with the likes of Joe Pistone?

Such questions are among those that fascinate Diego Gambetta. Professor Gambetta, an Italian sociologist based at Oxford University, has managed to wrap himself in the language of economics as capably as Pistone wrapped himself in the language of organised crime. Gambetta is an authority on the Sicilian mafia, but deploys the tools of an economist to understand them and other criminals.

A key concept in modern economics is the “signal”, an idea developed by the Nobel laureate Michael Spence. A signal is an action that distinguishes one type of person from a would-be mimic because it would be too costly for the mimic to carry out. Spence suggested that the decision to acquire a degree might be a signal. The degree may be of no practical value but employers may still value it and quite rationally pay higher salaries to graduates. Why? Because a degree will distinguish good applicants from bad – if bright, energetic candidates are willing to go to the trouble of acquiring one, while dim, lazy candidates are not. The degree serves no educational purpose but the employer uses it to separate the wheat from the chaff.