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Freakonomics’ Answer to Question of the Week
By Jeremy | November 12, 2005
Despite the lukewarm response to last week’s Question of the Week, for the three of you who cared, here’s Freakonomics take on it.
Q: If drugs dealers make so much money, why do they live with their mothers?
A: Except for the 2-5% of dealers at the top of the drug trade, drug dealers don’t make so much money. In fact, average “foot soldiers” make less than minimum wage working what is statistically the most dangerous (not to mention illegal) job in the United States.
The chapter is really quite revealing. The authors Steven Levitt and Stephen Dubner begin by challenging conventional wisdom in broad strokes, pointing out that conventional wisdom is often, “simple, convenient, comfortable, and comforting — though not necessarily true.” The idea that drug dealers make alot of money, they suggest, is another example of conventional wisdom run amok.
How they arrived at that conclusion is fascinating. A PhD sociology student from the University of Chicago set out to study how young people form their identities, and along the way stumbled upon members of the Black Gangster Disciple Nation. Although they held him captive for nearly 24 hours, threatening repeatedly to kill him, he became obsessively curious about “the daily life of ghetto criminals,” and so arranged with the leader of the gang to live among the gang members (literally sleeping at one apartment after another) for four years. He discovered, among other things, that the drug trade is run like a typical American franchise, where individual franchisees have the chance to make a decent living, but the burger flippers and janitors barely make a liveable wage.
The study occurred in the mid-1990s at the peak of Chicago’s crack epidemic and lasted until the gang was taken down by federal indictments. Among other findings, the gang’s records (meticulously kept to make sure the top dogs got theirs) showed:
“The top 120 men on the Black Disciples’ pyramid were paid very well. But the pyramid they sat atop was gigantic. … There were some 5,300 other men working for those 120 bosses. Then there were another 20,000 unpaid rank-and-file members, many of whom wanted nothing more than an opportunity to become a foot soldier. They were even willing to pay gang dues to have their chance.”
While the gang’s typical chapter leader earned approximately $8,500 per month (tax free, not including off-the-books money he skimmed), his officers earned only $700 a month ($7/hr) and the foot soldiers earned $3.30.
“The top 120 men in the Black Disciples gang represented just 2.2% of the full-fledged gang membership but took home well over half the money.”
In addition to the abysmal pay, dealers faced terrible job conditions, including working outside year-round, doing business with crackheads, and risking violence and arrest. As a result, members of the gange during the four year-study faced the following fate:
- Number of times arrested, 5.9
- Number of non-fatal wounds or injuries (not including injuries meted out by the gang itself for rules violations), 2.4
- Chance of being killed, 1 in 4 [”Which means that you stand a greater chance of dying while dealing crack in a Chicago housing project than you do while sitting on death row in Texas.”]
Topics: books, drugs, freakonomics, question of the week | No Comments »
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