Inside the Drug Game: What Economics Reveals About Illicit Markets

When we think of drug gangs, images of chaos and violence often come to mind. But beneath the surface lies a surprisingly organized economic structure. Financial records and field research reveal that drug gangs operate much like legitimate corporations, with clear hierarchies, wage disparities, and management strategies.

Street-level dealers—the foot soldiers—earn very little, often living with family and facing high risks. Meanwhile, leaders enjoy substantial incomes and control. This explains why many dealers do not flaunt wealth and why the aspiration to rise through the ranks is strong.

These insights challenge stereotypes and suggest that economic incentives and social context are central to understanding illicit markets. Policies aimed at disrupting these structures need to consider these economic realities to be effective.

Freakonomics sheds light on how incentives govern behavior even in the most dangerous and illicit environments, revealing the universal nature of economic principles.