Chapters 3-4

Chapter 3

1. What is “conventional wisdom?” What are some ways that “conventional wisdom” comes into being?

2. Explain why challenging the “conventional wisdom” with regard to a sticky social issue may be difficult to do.

3. Considering this chapter’s 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?

4. 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.

5. Describe, in general terms, the organizational structure of the Black Disciples street gang. How is it similar to the organizational structure of most business?

6. 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.

7. 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?

8. What are monthly costs incurred by J.T.’s unit of the Black Disciples? Which costs would be considered fixed costs? Which would be considered variable costs?

9. Explain how a “tournament” or “winner take all” labor market works.Why would a street-level drug dealer be willing to accept low pay and poor working conditions?

 10. Give your own examples of a “tournament” type of labor market.

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. According to the data cited in this chapter, civil rights laws and a shift in the attitudes in the United States regarding race helped to improve the status of black society. How did crack cocaine alter that progress?

14. Based on the examples in this chapter, what does the invention of better and cheaper production methods do to the price and sales of a good or service?

Chapter 4

1. In economic terms, what was Nicolae Ceau_escu’s rationale for banning abortion in Romania, i.e., how did he see banning abortion befitting the Romanian economy?

2. Describe the incentives Ceau_escu used to increase the birth rate in Romania.Were these incentives effective? Explain.

3. As a result of Ceau_escu’s policies, what happened to the average quality of life in Romania? Provide an economic explanation for the change that occurred.

4. Describe the general behavior of the crime rate in the United States between 1970 and 1999, i.e., indicate whether it was increasing or decreasing from year to year.

5. List each of the explanations of the drop in the crime that occurred in the 1990s that are evaluated by Levitt and Dubner.

6. Of the explanations you identified in the previous question, which ones do not appear to in fact be valid? Which ones do appear to in fact be valid? 

7. The argument linking the drop in crime to the robust economy in the1990s would seem to be quite strong. Provide a brief explanation of what the data have to say about the viability of this explanation.

8. What rationale do some criminologists offer for the argument that imprisonment rates should be lowered as part of the effort to reduce crime in the United States? Was their logic sound? If not, what fallacy did they commit?

9. What does the available evidence have to say about whether increased reliance on prisons is a viable explanation for the drop in crime in the 1990s?

10.What does the available evidence have to say about whether increased reliance on capital punishment is a viable explanation for the drop in crime in the 1990s?

11. Explain how an increase in the number of police officers could cause the crime rate to decline. Does the evidence support this explanation of the drop in crime in the 1990s? Explain.

12. Many observers maintained that the drop in crime in the 1990s was at least in part due to the adoption of innovative policing strategies. Focusing on the experience in New York City, what do the data tell us about the viability of this assertion? Should we then conclude that smart policing is not a good thing? Why or why not?