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The Summary of the Chapter 3 of Freakonomics by Steven Levitt and Stephen Dubner

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The book Freakonomics written by Steven Levitt and Stephen Dubner, is a novel written with a purpose to examine life’s oddities with the tools of economics. The third chapter of this book is entitled “Why Do Drug Dealers Still Live With Their Moms”, and the main idea of this chapter is to elaborate on the fact that people often assume things that are not true as it turns out. Authors prove this by showing statistics from various experiments and showing how conventional wisdom applies in these instances.

The chapter lays itself out with an opening of defining conventional wisdom. According to economic sage, John Galbraith, conventional wisdom is information that is convenient, comfortable, and comforting and typically untrue. Conventional wisdom appears untrue when it is sloppy or self-interested. Levitt and Dubner used an example of a statistic that seemed high, people didn’t really question it initially because it was said by an expert. Although experts can be very deceptive, they depend on journalists and vice versa. Authors Levitt and Dubner say advertising is their powerful tool for creating conventional wisdom. The example they used was Listerine, and how it was advertised as a breath freshener after originally being a floor cleaner. Authors also talk about an experiment regarding Black Disciples, a drug dealing gang.

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Sudhir Venkatesh’s assignment was to visit Chicago’s poorest black neighborhoods with a clipboard and a seventy question, multiple-choice survey. He got to know members of the Black Gangster Disciple Nation and soon became intrigued by their drug dealing operation. His project was comprised of three sixteen-story buildings made of yellow gray brick. Sudhir was wrongly convinced by their false information at first, but decided to keep on going with his task until his questions were genuinely answered. He got to know them well in the 6 years of study. He learned that J.T. was the leader of the crack gang, because he was bred to be a boss.

Levitt and Dubner also elaborate on the gang structure, their payment, and how incentives affect these people as well. Being that J.T. was the leader of the gang, he reported to a central leadership called the board of directors. The way the business worked for these crack dealers was they were paid 20 percent of revenue. J.T.’s branch of the Black Disciples made larger amounts of money while lower members of the hierarchy made very little. J.T. allowed his officers to take home about $700 a month and his foot soldiers only $3.30 per hour, which is less than the minimum wage.

The reason these people are paid so little is later explained by Levitt and Dubner through the history of cocaine. Authors said that more people are doing this job, so it means they make less money off of it. People in the lower ranks of this business would end up quitting because they don’t ever end up moving any higher. The way wages are determined in this occupation is mainly based on the amount of employees doing this job as well. They also determine wages by the specialized skills required, the unpleasantness of a job, and the demand for the services that a job fulfills.

In summary, this chapter was written to explain the reason why drug dealers still live with their mothers. The reason for this, all in all, is because they are too poor. In this industry it is hard for them to work their way up and make more money. They can’t move up in status.

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