Freakanomics Chapter 3 Flashcards

Questions and Answers

Conventional wisdom is the idea of associating with .

Truth, Convenience

What is conventional wisdom?

The idea that we find highly acceptable what contributes most to self-esteem.

According to Galbraith, conventional wisdom must be , , and _______ though not necessarily true.

Simple, Convenient, Comfortable, Comforting

Who is Sudhir Venkatesh?

A sociologist who met with the Black Disciples gang and studied the structure and payroll for all the members. Signup and view all the answers

Who is JT?

A hardworking, charming and responsible leader of the Black Disciples who gave Sudhir Venkatesh the copybook about the gang's budgeting. Signup and view all the answers

A gang's organizational structure is almost identical to the American business known as __________.

McDonald's Signup and view all the answers

A crack gang works like the standard capitalist enterprise: you have to be of the pyramid to .

Near the top, make a big wage Signup and view all the answers

How are the motivations behind foot soldiers who make less than minimum wage, a pretty Wisconsin farm girl who moved to Hollywood, and a high-school quarterback who lifts at 5 AM similar?

They all start out very small and cheap in their fields but with hard work and talent they can become the best and make large amounts of money. Signup and view all the answers

When there are a lot of people willing and able to do a job, that job generally doesn't pay well. What are the four meaningful factors that determine a wage?

<ol> <li>Specialized skills a job requires, 2. Unpleasantness of a job, 3. Demand for service that the job fulfills.</li> </ol> Signup and view all the answers

Explain the rules of the tournament.

The tournament starts with many people. By doing impressive things such as selling drugs well and expanding to more land, you will advance. Throughout the tournament, others will quit. The winner becomes the leader of the gang and earns a lot of money. Signup and view all the answers

How are JT's incentives different from the foot soldiers'?

JT has already worked hard to get to the top and does not have to work as hard as foot soldiers who want to be where JT is one day. Foot soldiers have a higher chance of dying. Signup and view all the answers

What did crack cocaine have in common with nylon stockings?

Both industries saw sales erupt when they thought of cheaper ways to sell to a broader audience. Signup and view all the answers

What is the purpose of Chapter 3?

To show that conventional wisdom is not always true. Signup and view all the answers

Who makes conventional wisdom?

Experts. Signup and view all the answers

What are examples of conventional wisdom?

Listerine, Rape stats, Homeless deaths. Signup and view all the answers

What is the belief or truth that is assumed but not accurate?

Conventional wisdom. Signup and view all the answers

How is conventional wisdom involved with stickiness?

The audience is interested in the topic and a wild statistic will be sticky. Signup and view all the answers

Describe Listerine's advertisements.

They coined the term halitosis, making people think they have bad breath and desire to buy Listerine products. Signup and view all the answers

Describe the organizational structure of the Black Disciples gang.

There were hundreds of foot soldiers making little money, while the leaders ahead made hundreds of thousands of dollars. Signup and view all the answers

Explain how the incentives of police departments and the public media gave rise to explanations of the rising crime rate in the 1980s that were totally wrong.

Cleaner areas gave the cops the illusion that it was a safer space, leading to less police activity and therefore greater crime rates. Signup and view all the answers

How did the records of the Black Disciples end up in the hands of a Chicago student?

Venkatesh was given a clipboard with questions to ask African Americans and stumbled upon the Black Disciples' headquarters, gaining their trust and access to financial records. Signup and view all the answers

What are examples in the type of tournament in the labor market?

People in McDonald's have little chance of rising, while managers earn impressive amounts due to credentials and work ethic. Signup and view all the answers

How do the incentives of the street-level drug salesman differ from those of the gang leader owner?

Street-level salesmen face a higher chance of dying, while owners face higher chances of being arrested. Signup and view all the answers

How did the invention of crack cocaine transform the urban street gang?

Crack cocaine became affordable, allowing those in poor neighborhoods to access it, leading to a surge in sales. Signup and view all the answers

Study Notes

Conventional Wisdom

Conventional wisdom links truth with convenience, often prioritizing self-esteem over accuracy.
This concept is defined as beliefs commonly accepted, despite lacking factual basis.
According to Galbraith, conventional wisdom is characterized by being simple, convenient, comfortable, and comforting.

Sudhir Venkatesh and the Black Disciples

Sudhir Venkatesh is a sociologist who studied the structure and operations of the Black Disciples gang.
JT, a notable leader within the gang, provided Venkatesh access to insights into the gang's budgeting.

Gang Structure and Economics

The organizational structure of drug gangs mirrors that of large corporations like McDonald's.
Higher financial returns are available to those near the top of the gang's hierarchy.
Individuals in various fields, from foot soldiers to aspiring professionals, often start at low wage levels but can ascend to higher earnings through dedication and skill.

Wage Determinants

Wages are influenced by several key factors: job availability, necessary specialized skills, job unpleasantness, and demand for the service provided.

Drug Dealing Tournament Analogy

The drug dealing business resembles a tournament where numerous participants initially vie for success; those unable to progress often withdraw.
Success in this "tournament" leads to significant financial rewards and placement at the helm of the gang.

Incentives and Risks

JT's established position allows for reduced work intensity compared to foot soldiers, who face greater risks and work harder to climb the ranks.
Street-level drug dealers encounter higher mortality risks, while gang leaders face the threat of arrest.

Market Dynamics

The emergence of affordable crack cocaine revolutionized urban gang dynamics, greatly increasing accessibility and sales for impoverished communities.

Erroneous Crime Perceptions

Police and media narratives during the 1980s mistakenly suggested that cleaner neighborhoods implied reduced crime rates, leading to decreased police presence and increasing crime.

Conventional Wisdom Examples

Notable examples of conventional wisdom include beliefs surrounding Listerine, rape statistics, and homelessness.

Listerine Marketing Strategy

Listerine's advertisements popularized the term 'halitosis' to create consumer anxiety about bad breath, thus driving product sales.

Records Acquisition

Venkatesh's research led him to unexpectedly acquire financial records of the Black Disciples after building relationships within the gang.

Labor Market Tournaments

Fast food workers experience similar "tournament" dynamics, with low starting wages and limited advancement opportunities contrasting heavily with managerial positions.

Transformations in Drug Use

The transition from cocaine to crack enabled more widespread use among lower-income populations, significantly boosting sales and altering gang activities.

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Description

Test your knowledge with these flashcards covering Chapter 3 of Freakanomics. Explore concepts such as conventional wisdom, truth, and self-esteem. Perfect for students looking to reinforce their understanding of the chapter's key ideas.