freakonomics chapter 3

chapter 3: freakonomics conventional wisdom: body of ideas or explanations generally accepted as true by the public or by experts in a field challenging the conventional wisdom of a sticky social situation may be difficult since experts are usually the ones presenting the facts advertising increases the demand of a market good
“pitched as a solution for “chronic halitosis”—a then obscure medical term for bad breath. Listerine’s new ads featured forlorn young women and men, eager for marriage but turned off by their mate’s rotten breath. “Can I be happy with him in spite of that?” one maiden asked herself. Until that time, bad breath was not conventionally considered such a catastrophe. But Listerine changed that. As the advertising scholar James B. Twitchell writes, “Listerine did not make mouthwash as much as it made halitosis.” In just seven years, the company’s revenues rose from $115,000 to more than $8 million.” police fudged crime reports to create the illusion that Atlanta was becoming a safer cities incentive- 1996 Olympics ran into black disciples hangout while searching for people to take his survey hung out with them came back later with more questions became friendly with leader (JT) observed gang activity booty gave him financial records
Board of Directors (central leadership, 20 men)
JT (pays BOD 20% of revenue for the right to sell crack in a certain area)
3 officers: enforcer,treasurer, runner
25-75 foot soliders rank and file (not employees, just gang members) monthly costs below fixed costs: death benefits, legal costs, bribes, gang events, guns variable: cost of drugs, wages, wages of board of directors, mercenary fighters tournament labor markets: labor starts at the bottom and slowly works its way to the top willing to accept low wages and poor conditions bc they think eventually they will work their way to success and wealth ex: major and minor league sports incentive of a street salesman=advancement maximized their own profits, flat rate incentive of leader=high profits maximize gang profits, more gang profits more revenue for them crack- cheaper version of cociane with a quick high quick high caused increased demand - addictions gangs owned areas, could sell crack to people in areas for $$ mid 1960s - black white gaps were shrinking (income, test scores)
1980 - invention of crack, gaps once again widened, blacks sent to jail tripled, black homicide quadrupled