Economic Gangsters


Columbia’s Ray Fisman and Berkeley’s Ted Miguel are two of the most creative and interesting economists I know.

Each is driven to better understand just what keeps poor countries in poverty, and they are willing to try some pretty amazing research strategies to figure it out.

They have traveled far and wide — both geographically and intellectually — and in their beautifully written book Economic Gangsters, they shine a well-honed statistical spotlight on the twin evils of corruption and violence.

The book is a dead-set page turner, and there’s nothing more fun than feeling like you are next to them as they travel the world in search of the scoundrels responsible for so much suffering.

Ted and Ray are the Briscoe and Logan of economic development, and you can’t help but cheer them as they try to figure out just whodunit. These guys are passionate about development, about economics, and about explaining just why the new wave of development economics is so darn interesting. Their excitement and passion is contagious.

Neither Ted nor Ray are strangers to readers of this blog. In fact, some of the stories in their book have been touched on by my fellow freako-bloggers. These are the guys who:

Documented crony capitalism in Indonesia, by showing how the stock prices of various firms rose and fell with President Suharto’s health.

Illustrated the presence of a culture of corruption, by showing that U.N. diplomats from corrupt nations were also more likely to run up (and not pay) hundreds of parking tickets in New York. And it also turns out there’s a culture of war — and soccer players from war-torn nations are more violent, earning more yellow cards.

And there are many more interesting stories: how statistical discrepancies in trade data recorded by different countries tell us about smuggling; how rainfall patterns can help uncover the linkages between economic failure and war; and even how a bad economy leads to more witch killings.

Beyond these stories, Ray and Ted illustrate the power of the new movement toward “forensic economics,” in which painstaking data analysis can help us better understand just who the bad guys are, what they are doing, and why.

And there’s more good news: the authors have also set up a blog to go with the book (Dubner and Levitt can tell us about how that works out!). Here’s Levitt’s cover blurb for Economic Gangsters: “Rarely has a book on economics been this fun and this important.”

Steve’s right. (O.K., I’m a somewhat-biased observer — Ray and Ted are friends of mine from graduate school.)

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  1. frankenduf says:

    this one’s easy- pull out a map and point to any country that was colonized (throw a dart south of the equator)- there you have a poor country- any country that was not colonized is wealthy- and what keeps them poor is ongoing economic imperialism: they are not allowed to develop unless they open up to foreign investment, which proceeds to pull wealth out of the country- ironically now, we are all faced with our own medicine- if foreign capital decides to divest from our country, thereby making a run on the dollar, we will be in deep kimshee (presuming korea is poor)

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  2. Matt says:

    I was never planning on commenting on this book. However, I recently purchased the book due to the blurb from the Freakenomics authors.

    The book presents some interesting concepts, the Suharto analysis. Overall though, I though the book was poorly written, and lack any intellectual depth. The writting style of the book was painful. It seems to have been written to aspiring first year economic students, in which the authors continiously trivialize the limits of research. Additionally, the authors have a very conservative view of the human condition and the limits of wealthy nations to affect change. Finally, the book is so poorly sourced that most of its revelations are presented as little more than conjecture, which become very frustrating. 1421/ 1434 were better sourced.

    However, the book is a quick read, and does provide some basis for thought in the real world. I recomend – but it is no ‘freakonomics’ and does not even approch ‘Traffic’.

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  3. steve pesce says:

    Unless they’re ready to use those guns to apprehend the crooks on Wall Street, then it does us no good. The SNL bums went to jail, the Enron bums went to jail. Now it’s time for these wall street criminals to GO TO JAIL.

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  4. Joe Smith says:

    There is nothing new under the sun. Anyone interested in this topic should consider how Bishop Absalon of Denmark established Copenhagen (a contraction / corruption of the Danish for Merchants’ Harbor) in a relative wasteland beset by pirates and brigands.

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  5. O says:

    The effect of corruption receives far too much attention when considering its tenuous relationship to poverty.

    The broad generalization that all colonized countries are poor is just as accurate.

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  6. brindelin says:

    RE #1

    Wasn’t the United States colonized?

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  7. Colin Suttie says:

    RE #1

    Australia was also colonized, not so easy really is it?

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  8. reservoirgod says:

    Yes, the US was colonized and the colonists never left. Ask the Iroqouis nation how US colonization worked out for them. In fact, the colonists not only stayed, they became the majority population, invited more colonists and then 300 years later branded the indigenous people illegal aliens.

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