An economic analysis of a drug-selling gang's finances

We use a unique data set detailing the financial activities of a drug-selli ng street gang to analyze gang economics. On average, earnings in the gang are somewhat above the legitimate labor market alternative. The enormous ri sks of drug selling, however, more than offset this small wage premium. Com pensation within the gang is highly skewed, and the prospect of future rich es, not current wages, is the primary economic motivation. The gang engages in repeated gang wars and sometimes prices below marginal cost. Our result s suggest that economic factors alone are unlikely to adequately explain in dividual participation in the gang or gang behavior.