The tools of microeconomics are increasingly being applied to topics that were traditionally the reserve of other social sciences. From behavioural economics investigating the psychological underpinnings of preferences, to political economics analysing voting patterns, economic techniques are helping to uncover new and often surprising results. Nowhere is this truer than the economic analysis of organised crime.
Organised crime operates in every country in the world. From mafias in Italy and Russia, to the drugs cartels of Mexico and Columbia, organised crime is widely viewed as a destructive force. Yet, as we will see, economics has uncovered an unexpected and highly controversial result — organised crime can improve welfare.
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