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Economic Theory and Grand Theft Auto IV (or How I Got a Great Idea for a Graduate Thesis)

By: Luke Gilman | Other Posts by
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Sudhir Venkatesh is the is William B. Ransford Professor of Sociology at Columbia University. He is also the kind of guy that writes articles entitled Unjustifiable Carnage, Uneasy Alliances, and Lots of Self-Doubt: What Grand Theft Auto IV gets right about gangland and illegal economies and that is why I like him.

This may sound strange, but I found that Grand Theft Auto actually offered a less sensational portrait of gangland and ghetto streets than the one put out by most cops, politicians, policymakers, and even academics. There is nuance in the game that exceeds most of the conventional portraits of American cities;

GTA IV offers a screenshot of
the local gangland economy

This is no apologia for the glorification of violence in video games or a paean to the majesty of Rockstar’s RAGE gaming engine, but simply taking an observation where it lies, something at which Venkatesh seems to excel. I discovered him through Levitt and Freakonomics, which says something about his willingness to undertake unconventional methods to get at or promote new ideas, on display most fully to date in his work culminating in Off the Books: The Underground Economy of the Urban Poor (2006). Venkatesh recognizes in Grand Theft Auto the underlying sameness that belies the external differences that tempt us to dismiss it out of hand – it is after all, a video game, an unreality, inherently escapist. What could we possibly expect to learn from it? And yet -

The game’s success can be traced to a simple principle: Niko Bellic, the protagonist who roams around Liberty City, making his way in the world by building relationships. Even in a city dominated by warring gangs and unjustifiable carnage, people have to find ways to work together not only to commit crimes but to resolve disputes, respond to injustice, and otherwise fulfill their assigned missions. As you move the dashing Niko through beautifully rendered streets, you build up his network of friends and comrades. Of course, in the exploitative terrain of the black market, you can’t trust anyone for long; this is one of the key challenges that animate GTA IV. But the point is that a lone wolf can’t survive. Niko has to take a risk and trust somebody.

Even the criminals must follow this rule. …. In other words, free agents abound on Wall Street and ghetto streets. GTA IV’s Liberty City gets this fluidity of enmity and alliance exactly right. A friend can become a foe; a gang member can turn on you; an ally is never to be trusted for too long. You can’t do it alone, and the game forces you to make your bets.

Venkatesh recognizes in criminal activity the same invisible hand that moved Adam Smith’s merchant class, with the same potential for market failure and waste when incentives are misplaced or economic actors are simply shortsighted. One function of economics is to remove our social blinders, to see the reality of our situation and to take the longer view. I doubt many GTA aficionados take away the same lessons, but they could, and Venkatesh is there to point it out to any who listen.

And now I have some empirical research to conduct…

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Category: freakin' economics, technology


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