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Posts Tagged ‘Black Markets’

Black-Market Study Notes in Korea

We recently got an e-mail from a reader we’ll call C.:

I’m a professor at an English-language liberal arts college in Seoul, South Korea, where I teach Greco-Roman classics in translation. Compared to most any American school, the academic climate here is hyper-competitive, and my Korean students are studying machines who will do whatever it takes to get good marks. If you’re familiar with the insanity of Korean education, those are my students, the ones who’ve spent years in private tutoring academies 6 days a week, doing nothing but preparing for our admissions exam.

I just learned through the grapevine that some students who took my freshman core course on Western Civ. are selling their notes, study guides, and reconstructed versions of the exam. The prices they charge current freshmen vary, depending upon the grade the seller received from me. Students who did very well (A or A+) can charge $200 for their notes; students who received Bs can ask $120 to $150. Students with a B- or lower can’t find buyers.

How Big Is the World Black Market?

Economists Ceyhun Elgin and Oguz Oztunali are researching the size of shadow economies, or black markets, around the world. Using a dataset with 7,395 observations for 161 countries from 1950 to 2009, they’re looking into how the size of black markets differs in rich and poor countries.

They estimate that shadow economies account for 22.67 percent of world GDP, with a generally downward trend that seems to have been interrupted by the global recession:

For almost all country groups (except for the post-Socialist one), we observe a declining trend over time. However, the pace of the reduction seems to lose some momentum in the last decade. Somewhat more interestingly, we observe a spike staring in 2007. Considering the emergence of the global economic crisis, this could give further support for the hypothesis that the size of the shadow economy is countercyclical, as suggested by Roca et al (2001) and Elgin (2012).

The Economics of a Ransom

In The AtlanticMegan McArdle traces the economics of ransom negotiation:

Economists would describe hostage negotiation as a bilateral monopoly price negotiation that is structurally just a special case of chicken. That is, unlike a barrel of oil or a freight car full of soybeans which can trade on an extremely liquid market with innumerable buyers and sellers, a hostage has exactly one seller (the kidnappers) and exactly one buyer (the employer and/or family of the hostage). When there is only one buyer, the opportunity cost for ransoming the hostage is zero.

Is the Idea of an Organ Market Losing Its Repugnance?

From a reader named Dmitry Mazin:

So I’m doing legalizing the organ market (selling your own organs only) for my speech class because I wanted to do something really repugnant and controversial.
Well, I passed out a survey to my class of about thirty people and two whole people were against this system. And this isn’t a progressive area — it’s in the Bible Belt of Southern California. Even Catholics were for it.
I think this corroborates that repugnance survey in the Freakonomics Radio episode “You Say Repugnant, I Say … Let’s Do It!”
So there you go.
Have a great day!

Hey, you have a great day too, Dmitry.
P.S.: I didn’t know there was a “Bible Belt of Southern California.” (Here’s a rare web cite about it; and here’s an earlier post called “We Pretend We Are Christians.”

The Sweet Underground

When elementary and high schools ban the sale of candy and sodas, students create flourishing underground economies to satisfy demand for the sweet stuff. In the ensuing crackdown, even high-profile figures are laid low. For example, in Connecticut last week, an eighth-grade student body vice president was forced to resign after he was caught buying an illicit packet of Skittles . . .