Chapter 3: Why do drug dealers still leave with their mums?
Complete the following questions while reading Chapter 3 of Freakonomics:
Section 1: Questioning the conventional wisdom regarding a complex social
question
1. What is “conventional wisdom?”
2. What are some ways that “conventional wisdom” comes into being?
3. What is the relationship between questioning and conventional wisdom?
4. Who are the “architects of much conventional wisdom”? Why?
5. Explain why challenging the “conventional wisdom” with regard to a sticky
social issue may be difficult to do.
6. Considering this chapterʼs analysis of the transformation of Listerine from an
antiseptic to a cure for halitosis, what can one conclude about the effect of
advertising on market demand for a good or service?
Section 2: The Economics of Drug Dealing
7. What was the incentive for Atlanta to start underreporting crime?
8. Describe, in general terms, the organizational structure of the Black Disciples
street gang. How is it similar to the organizational structure of most business?
9. Explain how four years of financial records of the Black Disciples street gang
found their way into the hands of a University of Chicago graduate student.
10. How did J.T., a branch leader of a Black Disciples street gang, acquire and
maintain a regional monopoly over crack cocaine within the territorial domain
of the gang?
11. How do the incentives of the street-level drug salesman differ from those of
the gang leader/franchise owner? Are they both attempting to maximize the
profits of the gang? Why or why not?
12. How did the invention of crack cocaine transform the urban street gang?
13. Prediction: What will this story have to do with economics?
Multiple-Choice Questions
1. According to Freakonomics, the conventional wisdom regarding the cause
of or solution to a sticky social problem is often wrong because:
a) political pundits and TV journalists are several steps away from “real life.”
b) “experts” use information available to them to serve their own agenda.
c) conventional wisdom is usually the first explanation for something and it tends to
“stick.”
d) people seldom use quantitative techniques to analyze social problems.
2. According to John Kenneth Galbraith, conventional wisdom comes into
existence because:
a) it’s usually a good explanation of the way conditions really are.
b) it’s derived from a close examination of the data.
c) it’s simple, comfortable, and comforting.
d) it’s created by people who have an interest in the explanations.
3. Analysis of its financial data revealed that the organizational structure of
the Black Disciples was most similar to:
a) a pharmacy.
b) a McDonalds.
c) an upside down pyramid.
d) a well-run Protestant church.
4. Most drug dealers live with their mothers because:
a) most of their mothers are poor and need help with expenses.
b) regardless of the high incomes, the only emotional connection a dealer has is
with his mother.
c) drug dealers are afraid to show off their money for fear they will be investigated
by the I.R.S.
d) street dealers are willing to earn very little pay in exchange for the possibility of
moving up in the organization.
5. Based on the available data, which of the following is the most dangerous
job in the United States?
a) Serving in the military.
b) Working as a timber cutter.
c) Working as a crack dealer in Chicago.
d) Working as a police office in Detroit.
6. Many people growing up on Chicago’s South Side opted for a career in
crack dealing in the 1990s because:
a) it was the best job they had access to.
b) anyone involved in the business was guaranteed to earn far more than the
minimum wage.
c) it was less risky than many other jobs that were available.
d) there were considerable opportunities for advancement up through the ranks of
the organization.
7. Which of the following most facilitated the expansion of the market for crack
cocaine in the United States?
a) An increase in the demand for alternatives to cocaine, such as heroin and
marijuana, which in turn caused the price of cocaine to fall.
b) A dramatic increase in the supply of cocaine which drove down its price.
c) The decriminalization of drugs in the United States.
d) A large decrease in the supply of cocaine.
8. Crime, and especially gang-related crime, flourished in the 1970s largely
because:
a) legal jobs paid much less than drug dealing.
b) the supply of potential criminals was very low.
c) everyone involved in gang-related crime was becoming rich.
d) the cost of committing crime, measured by the probability of capture and
punishment, was so low.
9. Which of the following best explains why crack dealers were able to sell so
much crack for so long?
a) Because it was addictive and, viewed from the customer’s perspective, there
were few if any viable substitutes.
b) The incomes of drug users, and hence demand for drugs, increased dramatically
in the 1970s.
c) Police departments avoided going after crack dealers and users for fear of being
labeled as racists.
d) The C.I.A was covertly supporting the dealers’ efforts.
Short-Answer Questions (<100 words)
10. Define the term “conventional wisdom.” Use examples to illustrate your answer.
11. Briefly describe a “tournament” form of labour market.
12. Illustrate, using a Demand and Supply graph, the effect the introduction of crack
cocaine had on the market for the type of high offered by cocaine and similar drugs.
(Note, on your exam any type of technological change could be used as an example
of this.)