JUST LIKE ANY BUSINESS:

Why Drug Dealers Live With Their Moms: If you had a job paying $3.30 an hour, you'd be bunking at home too. (Steven D. Levitt and Stephen J. Dubner, April 24, 2005, LA Times)

During the crack cocaine boom of the 1990s, the image of the millionaire crack dealer implanted itself on the public consciousness. But anyone who spent time around the Crips or Bloods or any other crack-selling gang might have noticed something odd: A great many crack dealers still lived at home with their moms. Why was that?

Sudhir Venkatesh, a University of Chicago graduate student at the time, discovered the answer.

He had originally been sent by his thesis advisor into a Chicago housing project to administer a sociological survey. But after a harrowing encounter with a local crack gang, he befriended its leader and virtually embedded himself with the gang for six years. He was given a pile of notebooks containing four years' worth of the gang's financial transactions — a trove of data that, when subjected to an economic analysis, proved incredibly revealing.

At root, economics is the study of incentives — how people get what they want, or need, especially when other people want or need the same thing. The rules apply just as well to a crack gang as to a Fortune 500 business.

As it turned out, the gang worked a lot like most American businesses, though perhaps none more so than McDonald's. If you were to hold a McDonald's organizational chart and the crack gang's organizational chart side by side, you could hardly tell the difference.

This is drawn from just one fascinating chapter in their excellent book, though the truth it reveals is well known to viewers of The Wire.

Posted by Orrin Judd at April 24, 2005 11:59 PM