Christian Long

Steven Levitt: Analyzes Crack Economics

In TED Talks on April 19, 2010 at 9:47 am

Reflection by VANCE L.

Original TED page w/ speaker bio, links, comments, etc:

Steven Levitt: Analyzes Crack Economics

Is thug life a happy life? Steven Levitt says no. Being in a gang or selling drugs in a gang is the worst job in America.

This presentation is “Rated – R” as he says, not for nudity but for drug content and language.

Back in time, in the early 80s, being in a gang or a gang leader let you beat people up and have prestige, but you had no money. In fact, you ended up at the end of the day living with your mom. Marijuana was cheap and made no money whatsoever, and you couldn’t get dues from gang members, because they had no money either.

Then came crack cocaine. Cocaine is a drug that makes you want a permanent high. When you come down after 15 minutes you just want to go up again.

A math major was coerced into a study where he went with a sheet of questions and observations to probably one of the worst inner-city ‘hoods in Chicago, if not the country. He was walking along and encountered a group of young african-americans playing dice. He wasn’t shot because he had a clipboard and was able to get through the survey alive. He was held overnight, released in the morning, and then he came back to hang out with them the next day.

For the next ten years.

Sadeer, that math major, now has access to the gang’s financial records. Their records look like McDonalds. They have a Board of Directors at the top and entrepreneurs at the bottom selling the drugs. The entrepreneurs are backed by the gang’s name.

The stats look like this:

  • Foot Soldiers (entrepreneurs): $3.50 per hour
  • Local Leaders: $100,000 per year
  • Second Level Leaders: $200,000 per year
  • Board of Directors: $400,000 per year

This sadly is the best way to get out of the hood. To deal drugs. However its not that beneficial at all, because there is a 25% death rate of those dealers. Being on death row in jail has a 0.2% death rate.

Barring the bad language, Levitt says that maybe economists and society need to rethink their philosophy.


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