Sunday, September 20, 2009

The Economics of Slangin' Rock

I just found this fascinating TED lecture by economist Steven Levitt on the social structure and economics of selling crack. What's surprising is that hustling rocks is a below-minimum-wage occupation with a 7% per annum employee death rate - despite the hype, a very shitty job.

Levitt is famous for being one of the co-authors of the book Freakanomics but is mostly known in the academic world for his research on the economics of crime and the underworld. His lecture recounts some of the findings of a 10-year research project into the economics of a crack-dealing gang from an inner city US housing project.

Unsurprisingly, being a hustler is incredibly dangerous, but perhaps more of an eye-opener is that the business is run very much like a franchise and that most street dealers had second jobs, moonlighting in the mainstream economy, because dealing crack pays below the minimum wage. The career prospects are slightly better higher up the ladder, but are still surprisingly modest in the grand scheme of things.

[Link: TED]

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