Freakonomics Summary

1598 Words 7 Pages
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything
Steven Levitt & Stephen Dubner

Andrew Feist
The University of Akron

United States Government & Politics 100-638
MWRF 11:00-11:50am
Dr. James Holland
07 November 2014 The connection between a teacher and a sumo wrestler probably has not crossed your mind. Have you ever thought about how real-estate agents are similar to members of the Ku Klux Klan? These are not connections you would usually make every day, but they are the basis of the book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything: co-authored by University of Chicago economist Steven Levitt and New York Times journalist, Stephen Dubner. In the book, they ponder the true explanations
…show more content…
The book ponders the question, “Why Do Drug Dealers Still Live with Their Moms?” (Levitt 79). Interesting, right? The authors attempt to explain the principle of fixed and variable costs of production, a topic commonly taught in university economics courses with numerous charts, equations, and numbers. This example involves the drug sales of a Gang Member, JT. His gang chapter has revenue from drug sales, extortion, and etcetera. His expenses include the cost of the drugs and “employee” salaries, since he doesn’t manufacture the drugs. JT’s fixed costs, “legal fees, parties, bribes, and gang-sponsored “community events,” will remain the same, regardless of the amount of drugs he sells (Levitt 91). His variable costs (drugs for example), however, will increase as his production increases. This is a fine example of simplistic representation of a broad topic using social issues. So why do drug dealers still live with their moms? Supply and demand of course. Supply and demand is in no way a difficult topic to understand. But the authors made sure to include several examples of it in this book. If JT is the only one selling his small amount of drugs on the street, and there are a lot of people who want drugs, he can sell them for whatever price he wants because supply is low and demand is high. He will be very successful, and he will not be living in his mom’s basement. However, if he is one of five people selling drugs on the street, which is more often the case, supply may be low, demand may be high, but then competition is high as well. Say all five of them buy the drugs from the same manufacturer. Then, if one person has a better relationship with that manufacturer, they have an advantage over the other four. They take control of the supply chain. The book refers to this as a tournament. These five drug dealers are going to

Related Documents