Freakonomics

So a copy of the galleys to Steven Levitt and Stephen Dubner (2005), Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (New York: William Morrow: 006073132X), arrived today. I open it at random and find:

[A] crack gang works pretty much like the standard capitalist enterprise: you have to be near the top of the pyramid to make a big wage.... [M]ost of J.T.'s foot soldiers also held minimum-wage jobs in the legitimate sector to supplement their skimpy illicit earnings. The leader of another crack gang once told Venkatesh that he could easily afford to pay his foot soldiers more, but that it wouldn't be prudent. "You got all these n** below you who want your job, you dig?" he said "So... you try to take care of them, but.. you also have to show them you['re] the boss.... If you start taking losses, they see you as weak." Along with the bad pay, the foot soldiers faced terrible job conditions. For starters, they had to stand on a street corner all day and do business with crackheads.... Foot soldiers... risked arrest and... violence... The results are astonishingly bleak. If you were a member of J.T.'s gang for all four years, here is the typical fate.... arrested 5.9 [times].... Number of nonfatal wounds or injuries (not including injuries meted out by the gang itself for rules violations)... 2.4.... Chance of being killed... 1 in 4.

A 1-in-4 chance of being killed. Compare those odds to being a timber cutter.... Over four years' time, a timber cutter would stand only a 1-in-200 chance of being killed.... So if crack dealing is the most dangerous job in America, and if the salary is only $3.30 an hour, why an earth would anyone do such a job? Well... they all want to succeed in an extremely competitive field in which, if you reach the top, you are paid a fortune.... To kids growing up in a housing project on Chicago's south side, crack dealing was a glamor profession.... [T]he job of gang boss--highly visible and highly lucrative--was easily the best job they thought they had access to. Had they grown up under different circumstances, they might have thought about becoming economists.... But in the neighborhood where J.T.'s gang operated, the path to a decent legitimate job was practically invisible.... [B]arely one in three adult men worked at all.... [F]oot soldiers often asked... help in landing what they called "a good job": working as a janitor at the university of Chicago....

I have a feeling that I am going to recommend this very highly indeed when I have finished it...

---

Indeed, highly, highly recommended. Dubner and Levitt take the reader on an extravagant romp through a remarkably large range of Levitt's work. Mind you, I'm not sure that the fall in America's violent crime rate in the 1990s is--as Donohue and Levitt believe--fallout from Roe vs. Wade (I give them a 70% chance of being right). And I'm not at all sure that the important parts of parenting are, as they put it, not what parents do but who parents are: the self-reported information about what parents do is, I guess, much less reliable--so it's no surprise that children whose parents say they read to them everyday but don't have many books in the house don't have superior reading skills. For at some level, the doing/being distinction is unsustainable: what are we but what we do? It's noisy versus more accurate signals.

Comments

[Winslow R.]

"they might have thought about becoming economists...."

From what I can see, another wasted profession. Politicians only listen to economists when they've screwed things up so badly, their lives or livelyhood is at stake. Just look at Argentina... or the U.S. in the 30's.

Thank goodness policies can be put in place during downtimes that can last several generations....dust off your plans for full employment and maybe help out these dealers in misery or will we have to waste a few million more lives...visit the center for full employment at http://www.cfeps.org/

[pragmatic_realist]

I would really like to see some serious economic analysis of the role of crime in an economy, such as the "mafia" in Soviet and post-Soviet Russia, black markets, "crony capitalism", the activities of government officials who cycle in and out of companies which get government contracts. An analysis not in moral terms but in a way that sorts out the functions of this kind of activity, maybe even rendering tasks and transactions that must be done but that the legal economy does not permit.

[The Unknown Professor]

In case anyone's interested, the "crack gang" story seems to be an excerpt from Levitt's NBER paper with Venkatesh. The URL for the download is

http://www.nber.org/papers/w6592

Unfortunately, if you don't have an NBER subscription, it'll cost you $5.

Keep up the good blogging. I often disagree with your analyses, but they always makes me think. After all, if I agreed with you all the time, I'd be redundant

The Unknown Professor
www.financialrounds.com

[Dubblblind]

Contrast the crack foot soldier's world with that of George W. Bush, who pretty much knew no matter how much of a fuckup he was things were going to turnout all right for him. He could even grow up to be President.

[BCT]

Here's their webpage. http://www.freakonomics.com/

[gd_2005]

"For at some level, the doing/being distinction is unsustainable: what are we but what we do?"

Hmmm Sartre suddently appears to hunt economists in the quest for empirical truth!? That deserves the term Freakonomics indeed.

[Elaine Supkis]

Bush took a turn at drug dealing, was arrested, had fun, daddy bailed him out, arrest record scrubbed, press lied for him about it, other arrests, some not scrubbed by accident, the press cleaned that up for him, too, even helping him with breaking federal insider trading laws, he even manages to steal the election in 2000 with the help of judges who owed him and his dad favors.

A life of crime----pays royally if you can buy off the criminal justice system, no?

[Unstable Isotope]

Interesting excerpt. I've wondered about the nature of forming an economic system. My husband used to play this video game that had started its own economic system. Somehow a certain artifact had become the standard of currency, and items were rated against this currency. That way, when trading items, players knew how much it would "cost."

[Bobby]

Unknown Professor,

I you have an email address with the extension .edu at the end of it, then NBER will send it to that address for free. That's been my experience.

[John Casey]

Mr. Dubner has a fascinating article in Sunday's NYT Magazine about a 27 year old assistant professor of economics at Harvard. Well worth a read. This kid wants to be the 21st Century WEB DuBois, and has the goods to deliver.

[DEEPGHETTO]

The street gang drug traffic has evolved unfortunately.The inner city crack epidemic is slowing as the generation of users,35-55,are either dying from various ailments,treatments are taking hold or jailed/losing income.But in the tradition of classical economics a substitute has arisen Heroin.The market for it is young white suburbanites who view it as chic and cheap.

[paulo]

So why do they sell crack for $3.30 an hour? No need for all that socioeconomic detail -- there just aren't any trees to cut down in the Chicago ghetto.

[Lester Spence]

i can't put a finger on when this occurred, but the reason the drug trade shifted wasn't because of a dearth of customers, but because the profit margin shrunk. after a while, crack became so ubiquitous that the price to make it was just a shade below the selling price. profit margins shrunk, so dealers did what any good businessperson would do...they shifted products.

john, check out that article about fryer again. levitt's skill is in using innovative datasets to get common sense answers. i would've never thought about asking one of my friends for their drug dealing data in a million years.

fryer may be the next guy that the nyt wants to push, but it isn't clear to me that he's as good as advertised.

[Darlene Soell]

I just wanted to know if this sounds freaky to you. When my kids where growing up I was in a abusive relationship with there father so they seen alot of bad things happen to me. My questions is that they seem to always have bruises from some form of physical activity and just tonight my son scratched his nose til is bled. Its almost like they need to see or have some form of hurt on themselves intentionally or otherwise. Is this something just freaky or could this relate back to when they were growing up in this horrible invironment? I just want to know is the two are connected in some freaky way. If this is not relavent to your economics I will understand but I just thought I would give it a shot. I saw your program tonight on primetime and loved it. I definetely will try to buy your book, it sounds great. thanks for your time. Darlene Soell