Why Drug Dealers Still Live with Their Moms &

Power-Law Distributions

“Experts,” Journalists and Conventional Wisdom

Annual Labor Day statistics on women’s earnings:

They are paid only 76 cents to men’s dollar for the same work.

DISCRIMINATION!!!

Logical follow-up question: “If an employer has to pay a man one dollar for the same work a woman would do for 76 cents, why would anyone hire a man?

“Experts,” Journalists and Conventional Wisdom

High pay, as it turns out, is about tradeoffs.

• Is the pay gap, then, about the different choices of men and women?

• Does this imply that mothers sacrifice careers?

“Experts,” Journalists and Conventional Wisdom

Don’t women, though, earn less than men in the same job?

(Source: an unpublished table compiled by the Bureau of Labor Statistics)

WOMEN MEN• Sales Engineer -- $89,908 $62.660 • Engineering managers -- $82,784 $76,752 • Aerospace engineers -- $78.416 $70,356 • Financial analysts -- $69,004 $58,604 • Radiation therapists -- $59,124 $53,300 • Statisticians -- $49,140 $36,296 • Tool and die makers -- $46,228 $40,144 • Speech pathologists -- $45,136 $35,048 • Advertising managers -- $42,068 $40,144 • Agricultural scientists -- $41,704 $39,156

“Experts,” Journalists and Conventional Wisdom

1990s: Crack cocaine is fostering a very affluent criminal underclass that could overwhelm police offers in terms of weapons and resources!

• If so, why did most of the crack dealers still live in the projects with their moms?

The answer, as always, lies in the data.

• Drug dealers are rarely trained in economics, and economists rarely hang out with crack dealers.

“Experts,” Journalists and Conventional Wisdom

Univ. of Chicago grad. student: Sudhir Venkatesh (Indian)

- What did subsequent data collection efforts reveal about the gang’s crack cocaine operations?

If drug dealers make so much money, why are they still living with their mothers?

- Answer: How much money do they actually make?

- 2nd Answer: What is their chance of being killed?

“Experts,” Journalists and Conventional Wisdom

• Rising to the top of drug dealing is not unlike rising to the very, very top of any profession. What is it like?

RULES:

- You must start …- You must be willing to work …- You must be more than …- Once you realize that you won’t make it, you will ...

Crack cocaine’s devastating effect on the African American community

When Only the Best Will Do: Maximizing vs. Satisficing

Fred Hirsch: “The more affluent a society becomes, and the more basic material needs are met, the more people care about goods that are inherently scarce (e.g., elite colleges, elite homes, elite preschools, elite club memberships, elite vacations, etc.)

e.g., supply and demand and college admissions

Maximizing, Satisficing & Managing ChoicesLesley Stahl reports on the controversial trend of

parents allowing teens to drink alcohol in their

homes in efforts to prevent drunk driving.  

(Photo:

AP)

Power-Law Distributions