Freakonomics | Study Guide

Steven D. Levitt & Stephen J. Dubner

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Freakonomics | Chapter 3 : Why Do Drug Dealers Still Live with Their Moms? | Summary


Key Takeaways

Throughout the book, the authors go to great lengths to dismantle long-held erroneous beliefs provided by conventional wisdom. Through their examples, they demonstrate just how insidious and wrong such beliefs can be, playing into stereotypes and providing people with rationales for their beliefs. Their ultimate purpose is to ask readers to question the origin of conventional wisdom and to examine accepted facts more closely.

  • Conventional wisdom, according to some, is simple, convenient, comfortable, and comforting—though it may not necessarily be true.
  • Although some experts can be deceiving, they cannot deceive others on their own—they need journalists to spread their information as much as journalists need experts to use as sources.
  • This makes the marriage of journalists and experts central to the founding of much conventional wisdom.
  • In the 1990s the booming market for crack cocaine led police departments to struggle for resources and spread the notion crack dealers made millions of dollars in the business.
  • However, the housing projects where crack was often bought and sold showed a different story: most of the lower-level crack dealers still lived there, at home with their mothers.
  • A graduate student in economics embedded himself with a crack-dealing gang and acquired their notebooks detailing all their criminal financial transactions.
  • Upon close examination, he discovered the gang's criminal enterprises operated in much the same way as a franchise: the gang itself was a branch of a much larger organization, and the leader paid 20 percent of the gang's earnings to a board of directors for the right to sell crack in their area and was responsible for paying his employees.
  • The gang's leader did well, making about $100,000 a year, yet everyone below the leader was paid according to their rank in the pyramid, with many earning what amounted to $7 or less per hour.
  • This low figure solves the question of why so many drug dealers still lived with their mothers and also demonstrates the similarity of a crack gang to a standard capitalist enterprise, with those at the top earning the most.
  • Job conditions are also precarious for the gang members, offering a 25 percent chance of being killed on the job.
  • Yet obstacles to top drug-dealing jobs are the same as any other competitive field—too many people competing for few prizes. Because aspiring drug lords are in abundance, low wages prevail at the bottom and middle levels.
  • As an incentive to keep customers buying and dealers dealing, some gangs made truces to minimize violence.
  • Crack cocaine was marketed as an alternative to the more expensive cocaine, as nylon stockings were marketed in 1939 as an alternative to silk.
  • Enforcing drug laws and imprisoning drug dealers made the problem worse because new contacts were made in prison, and released offenders became more knowledgeable about sales and distribution techniques.
  • With crack cocaine, gang membership increased because it became possible for "managers" to make a living if they wanted to marry and have a family.
  • Despite economic improvements for black Americans by the 1980s, the crack cocaine epidemic hit black neighborhoods harder than others and caused the homicide rate among young urban blacks to quadruple.
  • The crack cocaine epidemic is likely responsible in part for the widening gap between black and white student achievement.
  • Although experts predicted a rising crime wave of youth violence, violent crime began to decline.
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