Sunday, January 2, 2011

Steve Levitt on crack economics

http://www.ted.com/talks/steven_levitt_analyzes_crack_economics.html


Freakonomics author Steven Levitt presents new data on the finances of drug dealing. Contrary to popular myth, he says, being a street-corner crack dealer isn’t lucrative: It pays below minimum wage. And your boss can kill you.

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From the transcript:

But then we asked the gang member, "Well, why is it you always get paid, and your workers don't always get paid?" His response is, "You got all these n[..] below you who want your job, you dig? If you start taking losses, they see you as weak and shit." And I thought about it, and I said, "CEOs often pay themselves million-dollar bonuses, even when companies are losing a lot of money. And it never would really occur to an economist that this idea of 'weak and shit' could really be important." But maybe -- maybe "weak and shit" -- maybe "weak and shit" is an important hypothesis that needs more analysis.

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