Posted on 04/20/2005 8:48:36 AM PDT by 68skylark
KEN SILBER offers a positive review of Steven Levitt & Stephen Dubner's new book, Freakonomics : A Rogue Economist Explores the Hidden Side of Everything.
I haven't read it, but I like the discussion of the chapter entitled "Why do drug dealers still live with their moms?"
The upshot is that the crack trade, even at its market peak, was lucrative only for those at the top of a selling organization. The gang's foot soldiers made less than minimum wage and faced a 1-in-4 risk of being killed over four years. (In the same time, being a timber cutter, the most dangerous legitimate job in the U.S., carried a 1-in-200 risk.) These drug dealers struggled desperately to reach the gang's upper echelons, but few would make it.
I don't know Levitt's answer here, but one explanation (besides the obvious "they're idiots") for why people become drug dealers when the economic returns are poor is that being a drug dealer offers -- and, especially during the crack boom, offered -- nonmonetary returns, by having much more status than working minimum wage. (Read Richard Price's excellent book, Clockers
My historian-brother often says that one of the most interesting phenomena that he's observed is the cross-cultural willingness of people to trade away economic benefits for status. I suspect that this is one example of that. So, in a surprisingly similar way, is being a politician. That's an obviously poor economic move for most folks. But one of the drug dealers in Price's book talks about how he likes the way he becomes the center of attention when he enters a room full of junkies. Politicians, I think, get the same thing, especially in the bubble-environments of Washington, or state capitals. I suspect, in fact, that people are, to varying degrees, hardwired to get an endorphin rush from that sort of attention, just as they're hardwired in varying degrees to respond to drugs.
As I say, I don't know if Levitt talks about that or not, but I think it's one possible explanation for a lot of stuff that looks economically counterproductive.
UPDATE: Stephen Skaggs emails:
Take out "drug dealers" and "crack" and replace with "bloggers and
"Blogosphere."
Heh. And Greg Hlatky emails:
Take out “drug dealers” and “crack” and replace with “professors” and “universities.”
I guess that makes me a double-dipper. No wonder I'm always so cheerful! It's the endorphins! [So why isn't Brian Leiter happier? -- Ed. No theory is perfect.]
ANOTHER UPDATE: Reader Steve Barnes emails: "Talk to your budding rock-star brother and he can probably tell you about 'non-monetary' benefits."
Heh. Indeed.
Since I'm in my car a lot, I just bought the audio version of this book. Listened to it in the car today, disk 1. It's an interesting book. Basically, Leavitt is an economist that believes everything comes down to incentives.
Well, I don't think anyone can argue with that -- depending on how you define incentives.
Socialists think that socialism will work because they think people feel an incentive to help their fellow man improve his life. But it isn't true -- for most of us, other incentives overshadow our desires to work for others.
People want more tangible benefits, and benefits that land closer to home.
BTTT
Remember that drug dealers and welfare recipients, while neither have large yearly incomes, have complimentary income sources. The public assistance provides security, the drug trade provides discretionary income. For individuals with low earning potential from conventional employment, the combination is very attractive.
Note that this answers the initial question-"Why drug dealers live with their Moms?" and the incentive problem, "Why low-reward drug dealing attracts so much participation?".
This all assumes that there is a substantial proportion of drug workers whose family connections receive public assistance.
Freak Out! Freakonomics is as interesting as it is controversial.
Weekly Standard | May 4, 2005 | Dean Barnett
Posted on 05/06/2005 2:51:34 PM PDT by billorites
http://www.freerepublic.com/focus/news/1398229/posts
Freakonomics:
A Rogue Economist Explores
the Hidden Side of Everything
by Steven D. Levitt
and Stephen J. Dubner
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