Bloomberg reports that Italy will now begin including its shadow economy in the country’s GDP, in an effort to reduce the national deficit:
Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year, a boost for its chronically stagnant economy and Prime Minister Matteo Renzi’s effort to meet deficit targets.
Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.
So crack cocaine is a really devilish drug because it gives you such an intense high for such a short period of time that your desire is just to get high over and over and over. It’s highly addictive, and it’s really hard to function when you’re a crack addict. But what it makes me think is that this experimentation we’re doing now with policy towards drugs like marijuana, and potentially it would be expanded over time is a good idea. Because I think when it comes to marijuana, the social costs of the prohibition of marijuana are just really low. Very few people in the United States are being killed over marijuana. The gangs are not making their money off marijuana. Marijuana in some very real sense is too cheap. It’s too easy to grow yourself and so it isn’t the source of all of the ills that come with prohibition. And so, so the gains of legalizing marijuana for society are much smaller than the gains would be to legalizing cocaine if you could control how the outcome came.
But does marijuana legalization really harm anyone? Like poor minorities, for example? Michael Kinsley, Andrew Sullivan, and David Frumrecently debated that question, as well as legalization in general, for Bloggingheads TV. In an accompanying blog post, Sullivan points to Reihan Salam‘s recent post on the subject:
A new paper in JAMA Pediatrics finds that a small number of children are showing up in Colorado emergency rooms having unintentionally ingested marijuana. It seems they are gobbling up their grandparents’ medical-marijuana candy. The paper is gated but Medical News Today summarizes:
As background information, the authors, from the Rocky Mountain Poison and Drug Center, Denver, explained that medical marijuana has higher levels of tetrahydrocannabinol (THC) than when used recreationally. They added that medical marijuana is sold in candies, soft drinks and baked goods. … There is concern that parents/grandparents may not disclose their use of medical marijuana because of the perceived stigma associated with the drug.
Here’s a fascinating article in the Yale Journal of International Affairs, by Paul Rexton Kan of the U.S. Army War College, about cyberwar between non-state agents — in this case, Anonymous versus Los Zetas, the Mexican drug cartel. Read the whole thing; here’s the first paragraph:
In the fall of 2011, two clandestine non-state groups—a hacktivist collective and a Mexican drug cartel—stared each other down in the digital domain, with potentially fatal real world consequences for both sides. Los Zetas, a Mexican drug trafficking organization composed of former members of Mexico’s Special Forces, kidnapped a member of Anonymous, the global hacking group, in Veracruz on October 6th. In retaliation, Anonymous threatened to publicize online the personal information of Los Zetas and their associates, from taxi drivers to high-ranking politicians, unless Los Zetas freed their abductee by November 5th. The release of this information on the Internet would have exposed members of Los Zetas to not only possible arrest by Mexican authorities, but also to assassination by rival cartels. Unconfirmed reports suggest that Los Zetas then attempted to “reverse hack” Anonymous to uncover some of its members and to threaten them with death. As a consequence, a few members of Anonymous sought to call off the operation and disavowed those members who wanted to go forward. With time running out and locked in a stalemate, Los Zetas released their kidnap victim on November 4th with an online warning that they would kill ten innocent people for each name that Anonymous might subsequently publicize. Anonymous called off its operation; each side appeared to step back from the brink.
The AP reports that Brazilian drug lords are colluding to get rid of crack cocaine even though it will result in millions of lost dollars. Why? Because crack customers have made their jobs unmanageable:
“Rio was always cocaine and marijuana,” [former police chief Mario Sergio Duarte] said. “If drug traffickers are coming up with this strategy of going back to cocaine and marijuana, it’s not because they suddenly developed an awareness, or because they want to be charitable and help the addicts. It’s just that crack brings them too much trouble to be worth it.”
A few months ago, I discussed the tourist drug ban in the Netherlands, with a focus on my town, Maastricht. NPR just ran a story on the intermediate term effects of the new regulations. Some of the “coffee shops” (places where one could buy a pre-rolled or roll-you-own joint for €3) have reopened, as I predicted; others have not. Unsurprisingly, what has happened is that drug dealers, who previously had dealt only in hard drugs, are now also selling marijuana illegally. While total consumption of weed has probably dropped, buyers are worse off, as are coffee-house owners, with the main beneficiaries being drug dealers. As always, something that raises price in a legal market will increase demand in the illegal market.
In a recent Harry Hole mystery novel, The Leopard,Jo Nesbø (an economist as well as novelist) has Harry ask someone, “Where would you go to get it [a particular anesthetic] now?” and is answered, “Ex-Soviet states. Or Africa….The producer sells it at bargain-basement prices since the European ban, so it ends up in poor countries.” When rich countries ban something, they increase its supply to poor countries that refuse to ban it. Prices are lowered to consumers there. Rich countries’ safety is enhanced, poor countries’ worsened, with the only consolation that consumers in poor countries become able to obtain the harmful substance at lower prices. Are people in each country better off, worse off, or what?
Hello. My name is Thiago, and I am writing from Brazil. I always read freakonomics posts thru my rss reader and I saw a news today that inspired me to write to you.
I wondered if this incentive will have a positive effect, whereas there are bad cops who are bribed by drug dealers. What if these bad officers began to been rewarded by drug dealer with tickets to Disney instead of arrest them?
An FDA panel just approved the first drug recommended for preventing infection by, rather than limiting the effects of the HIV virus. Part of the discussion by panel members was classic economics, expressing concerns that the drug’s availability would reduce people’s willingness to take as much care, in particular that it might reduce condom use.
As of May 1, it is illegal for foreigners to buy soft drugs in three border provinces of the Netherlands. This new constraint is especially restrictive in Maastricht, which lies only 20 miles from the larger German city of Aachen and only 60 miles from Brussels, Belgium. Before May 1, foreign “drug tourists” flocked to the 14 “coffee houses” in the city, paying €3 or so for a joint and lighting up (since this activity is illegal in neighboring countries). In protest against the law, all 14 houses have closed.
Brian Palmer of Slate reports that cocaine prices have dropped significantly in the past three decades due to economies of scale. As drug traffickers have become more organized (in processing, transport, and retail networks), the price of cocaine has plunged:
Since [the end of the 1980s], the price has dropped more slowly, down to approximately $140 for a gram of pure cocaine in 2007. (That’s almost 80 percent less than it cost in 1982.)
My colleague Glen Weyl and Eric Posner at the University of Chicago Law School, argue in a recent white paper, that new financial products should be subject to regulatory approval analogous to that for new drugs by the Food and Drug Administration. Here is the abstract:
The financial crisis of 2008 was caused in part by speculative investment in sophisticated derivatives. In enacting the Dodd-Frank Act, Congress sought to address the problem of speculative investment, but merely transferred that authority to various agencies, which have not yet found a solution. Most discussions center on enhanced disclosure and the use of exchanges and clearinghouses. However, we argue that disclosure rules do not address the real problem, which is that financial firms invest enormous resources to develop financial products that facilitate gambling and regulatory arbitrage, both of which are socially wasteful activities.
A reader named Tim Wadlow writes in with an interesting theory:
I spent about 10 years as a operations management consultant, working with dirty, dull, and dangerous manufacturing companies.
After spending time at roughly 100 manufacturing locations around the world, I noticed an odd trend: the direction that employees parked in their parking spots highly correlated with employee morale and satisfaction with their jobs. Most of the cars parked forward? A good company to work for, with employees who want to get to work. Most cars backwards? It seems as though the moment that the employee got to work, he or she was planning a quick exit.
Next time you drive by a manufacturing company check it out.
Maybe CEO’s should study Google Earth maps of their parking lots to determine if they are changing a companies culture?
A new British study has found that people who scored well on IQ tests as children are more likely to be drug users as adults, especially women. Authors James White andG. David Batty published their study online in the Journal of Epidemiology and Community Health, and looked at data from almost 8,000 people over several decades to test what habits and qualities are tied to drug use.
The results suggest that men with high IQ scores at 5 years-old are 50 percent more likely to use drugs by the age of 30 than those with low IQ scores. High IQ scoring women at 5 years-old are twice as likely to use drugs than their low IQ counterparts.
A few weeks ago, Freakonomics received an email from a man in Mexico City describing the effects of Mexican drug cartel violence on daily life and asking for our solutions to his country’s seemingly endless crime problems. This week, The New York Times ran a piece on Mexican drug cartels and growing American infiltration of criminal organizations. Now, a new report from RAND on drug-trafficking violence in Mexico analyzes the situation in the context of an insurgency, bringing to bear research on defense-sector reform.
What’s clear is that the drug-fueled violence in Mexico has diversified over the last decade into several other underworld activities: human trafficking, weapon trafficking, and assassinations, just to name a few. In other words, the cartels are no longer just cartels — they are something larger.
The RAND paper reiterates many points that have become familiar to us about the situation in Mexico: corruption is rife, policing is weak. It also looks at how high unemployment and a “youth bulge” have helped fuel Violent Drug Trafficking Organizations (VDTO). For many young unemployed people, joining a crime syndicate is often the best job option. But the most jarring part of the paper is the discussion and comparison of Mexican drug violence to other insurgency trends around the world. Rather than a war on crime, what if the battle with cartels is really a battle with different insurgent groups?
My name is Mauricio Castro, I have a social communications degree and teach interface design and multimedia systems.
I have a story I’d like to share with you guys.
I live in a nice neighborhood in the city of Vitória, Brazil. Being close to the beach, the city code forbids tall buildings in order to maintain sunlight in the sand all time. The maximum floor number is three.
So it’s only natural that most buildings here don’t have elevators. Even some new ones are presented only with stairs, especially those built for the younger customers.
So I went to the health clinic the other day and the nurse was telling me about the rising numbers of youngsters suffering from strokes. There are lots of explanations for these numbers rising, but mostly lifestyle and drug abuse.
A reader named Rodolfo Ostolaza writes in with a most heartfelt plea about violence in Mexico. He would welcome all suggestions.
I live in Mexico City and, although the wave of violence in my country has not yet fully reached this area, I’m worried because we are living a state of terror, with bloody attacks, and a lack of humanity. That is why I am requesting your help.
What do you think we can do to change this? According to the chapter on crime reduction in Freakonomics, a judge’s decision was more influential than a change in public policy and law enforcement bodies in reducing crime in the U.S. I wish we could apply this “recipe” (allowing abortion throughout Mexico, which is currently legal only in Mexico City) to keep the hope that, in the future, things will be brighter. However, considering the Mexican idiosyncrasy, with strong influence of the Catholic Church, I believe that this measure would have, at best, a marginal impact.
I want you to share this question with your readers. Give us suggestions, ideas, different perspectives to analyze the problem. What follows are some thoughts and questions of how, I think, the problem should be analyzed.
First we must understand precisely the problem itself. It is true that the violence began to grow exponentially after President Calderón declared war.
In honor of Fashion Week, Freakonomics would like to shine a light on a fashion trend happening south of the border in Mexico. We’ve covered the copyright battle over red-soled shoes, but today we’re focusing on Edgar “La Barbie” Valdez Villarreal, the alleged drug cartel boss who was arrested last year.
A new study by addiction and neuroscience researchers sheds new light on understanding how cocaine addicts make decisions, and how they value the drug against the immediate and delayed reward of other items, such as cash. The upshot is that addicts discount cocaine at a steeper rate than they do money, consistently choosing to have money now, rather than twice the value of cocaine later. Here’s how the experiment worked:
Forty-seven cocaine addicts (who were all seeking treatment) were asked to guess the number of grams of cocaine worth $1,000. They were each then given a series of choices: cocaine now versus more cocaine later; money now versus more money later; cocaine now versus money later; or money now versus cocaine later. The initial amount offered for the immediate choice has half of the full value, and the delayed amount was always the full value. Preference was almost exclusively given to the money now option, according to the study’s lead researcher, Warren K. Bickel, a psychology professor at Virginia Tech, and director of the Advanced Recovery Research Center there.
Last week was the sixth annual Operation Rolling Thunder police crack-down in Spartanburg, SC. Each year, law enforcement from North and South Carolina converge on the Spartanburg interstate highways for a five-day dragnet aimed at drug trafficking. This year officers made 18 felony arrests, netting $215,000 of seized cash, 11 pounds of cocaine, and eight pounds of marijuana.
“The numbers are a bit lower than in the past, I’m proud of that, meaning they are staying out of Spartanburg County, which that is our desire,” said Sheriff [Chuck]Wright. “I try to tell everybody that every piece of drug paraphernalia or drug you can find and get off the street, that’s one more somebody’s son or daughter that’s not having to deal with that.
That is the question I found myself asking while looking at a new Centers for Disease Control report that analyzes drug-overdose deaths in Florida from 2003-2009. I am guessing the answer is a resounding yes, but it’s probably a question worth asking. During that period, the death rate for prescription drugs rose 84.2 percent, from 7.3 to 13.4 per 100,000 people. (Note that these numbers represent unintentional deaths, not suicides — although when you’re talking about death by drugs, the intention isn’t always clear.) Interestingly, the death rate from illicit drugs — primarily heroin and cocaine — has fallen 21.4 percent, to 3.4 per 100,000 people.
A new study has some interesting things to say about the demand curve of heroin users. Drawing data from volunteers who use the drug daily, researchers Juliette Roddy, Caren Steinmiller, and Mark Greenwald tested three parameters: an income shock; removing the financial support of family and friends; and multiplying the the risk of getting caught. They found that income reduction had some effect: as income decreases, those who purchase a lot of heroin scaled back more than those who bought a little. When government subsidies were removed, participants also attested that they would buy less. They also found that participants with cocaine in their urine were more efficient drug buyers – this subgroup lowered transaction costs by shaving both distance (making sure they lived close to a drug dealer) and time in their purchases. They found that the more frequent the user, the most cost-effective they are about their heroin purchases, with those who also use cocaine being the most effective shoppers.
From a recent USA Today article by Jonathan Shorman comes an astounding (to me) set of facts about drugs and driving that certainly ought to be considered as part of the conversation about decriminalizingmarijuana:*
Researchers examined data on more than 44,000 drivers in single-vehicle crashes who died between 1999 and 2009. They found that 24.9% tested positive for drugs and 37% had blood-alcohol levels in excess of 0.08, the legal limit. Fifty-eight percent had no alcohol in their systems; 5% had less than 0.08. The data were from a government database on traffic fatalities.
Study co-authors Eduardo Romano** and Robert Voasof the Pacific Institute for Research and Evaluation in Calverton, Md., say their study is one of the first to show the prevalence of drug use among fatally injured drivers. Among drivers who tested positive for drugs, 22% were positive for marijuana, 22% for stimulants and 9% for narcotics.
We’ve written a lot about the economics of drugs, both legal and illegal. There’s an interesting article in Popular Science about Pyrex bake ware, crack cocaine, and the unintended consequences of reducing a product’s quality.
What do actual drug dealers think about economists’ research on drug dealers? NPR’s Planet Moneyasks the question of drug dealer Freeway Rick Ross, and gets some illuminating answers.
A new study finds that drug use in Britain is declining amount young adults: “According to figures released by the NHS in January, based on data from the British Crime Survey, the number of adults in England and Wales who used illicit substances in 2009-10 – 8.6% – was the lowest recorded since the study began in 1996. Among 16-24-year-olds, the picture was the same, with just 20% saying they had taken drugs in the previous year – another record low, and a third lower than the proportion 15 years ago.”
What’s a big-enough incentive for an Ivy League student to allegedly start selling narcotics? The best people to answer that question would seem to be Chris Coles, Harrison David, Adam Klein, Jose Stephan Perez, and Michael Wymbs, five Columbia University students who were busted yesterday for being part of a campus drug ring.
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