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Posts Tagged ‘Prostitution’

Italy to Include Prostitution and Illegal Drugs in GDP

Bloomberg reports that Italy will now begin including its shadow economy in the country’s GDP, in an effort to reduce the national deficit:

Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year, a boost for its chronically stagnant economy and Prime Minister Matteo Renzi’s effort to meet deficit targets.

Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.

Child Trafficking and the Internet

Chatting with a seatmate on a flight, I learned she was attending a conference, hosted by Shared Hope International, on domestic trafficking in minor children. Naively and optimistically, I asked if this problem has been diminishing.  No, quite the contrary.  Why?  The reason appears to be economic, having to do with technological change and technology transfer.  With the internet, it is much easier to engage in transactions — nothing needs to be done face-to-face, thus reducing the risk to traffickers. Also, organized crime is getting involved since the trade is so profitable, as at-risk children can be traded repeatedly (unlike an ounce of crack cocaine). With some modifications, an established drug network can be used as a child-sex network.  Disgusting, horrible, and a negative side-effect of technological progress.  (HT: JM)

Adventures in Ideas: Sex Workers of the World, Unite! An Interview With Maxine Doogan

Freak Readers, It is my distinct pleasure to introduce Maxine Doogan, from the Erotic Service Providers Union. I won’t offer a lengthy introduction —I’d embarrass Maxine! — because her words below say it all. Maxine has taught me a lot about prostitution and the sex trade in general. She has been instrumental in helping me craft my own research. Together, we hope to launch the first multi-city comprehensive research study of the sex economy. In a subsequent post, I’ll ask you for some feedback on that project. For now, I want to share her insights about the sex economy today. 

Q. Our readers might be interested in understanding exactly what you are seeking that might improve the economic conditions of sex workers? By the way, how you do you define “sex worker”?  

A. To improve one’s economics is to improve their lives and the larger communities. 

When the Economists Arrive, Do the Prostitutes Leave?

I was walking outside the American Economic Association meetings this past Sunday when a man stopped me and asked what all the university professors were doing in one place.  I told him that it was the annual convention of economists, and got a hearty laugh by telling him the old joke that when the economists arrived in town, the prostitutes left.  This joke is a good illustration: the arrival of economists represents a decrease in demand; the prostitutes’ leaving represents a decrease in the amount supplied.  I don’t know the shape of the supply curve, however, so I can’t speculate about the size of the change, if any, in the equilibrium price. But the joke does suggest that the equilibrium quantity transacted decreased.

Taxi Tipping and the Principal-Agent Problem

A reader named Matt Hasten writes in to say:

While in Las Vegas last week for a convention, I took a taxi between casinos (might as well see a few while making my contribution). When it came time to pay and I pulled out a credit card, the cab driver informed me that using a credit card would mean paying a $3 fee in addition to the fare ($11.50). This struck me as a ridiculously high surcharge and when it came time to tip the cab driver (all of this using the back seat electronic card reader), I did not add anything extra. My logic was that while I usually tip 20% on cab fare, that would have only been $2.30 and I already was paying $3 above the fare.

I explained to the cab driver that the money I would usually spend tipping him was instead paying for the $3 fee the cab company imposed on me. The cab driver, understandably, saw things differently and had some colorful wishes for the remainder of my evening. At the time, I felt justified not tipping because I felt the only way to make my displeasure known about the fee was to stiff the cab driver and hope his (and other cab drivers’) anger of missing out on tips might put pressure on the cab company to change the policy. In hindsight, I do feel bad about stiffing the driver! I’m the kind of guy where you have to really mess up to earn less than a 20% tip at a restaurant.

I know the driver didn’t set the $3 credit card fee, but taking it out on him by not tipping was the only way I saw to make my displeasure known or, better yet, impact a greedy policy.

Was I right to not tip?

Is There a Better Prostitution Policy?

Sam Lee of NYU and Petra Persson of Columbia send an e-mail:

We have written a research paper [“Human Trafficking and Regulating Prostitution”] that theoretically analyzes the impact of prostitution laws on voluntary sex work and sex trafficking. The central message of the paper is a new policy proposal (see Q6 below). Here are some of the questions we ask and the answers we find:

Q1: Which regulatory approach, legalization or criminalization, is more effective against trafficking?
A1: Neither. Either approach can increase or decrease trafficking, depending on the appeal of voluntary sex work, which in turn depends on things such as the female-male wage gap.

Q2: What about studies that document higher trafficking inflows into countries that legalize prostitution?
A2: In the presence of sex tourism (which is, for example, non-negligible for Germany, Spain, and the Netherlands), the increase in trafficking in the legalizing country can be more than offset by a decrease in trafficking in the neighboring countries. Thus, overall, trafficking can actually decrease.

The Economics of Prostitution, Belle Epoque Edition

Two French economists, Simon Porcher and Alexandre Frondizi, have been working on a paper about the economics of Paris street prostitution in the late 19th century.

In 1878, there were an estimated 23,000 unregistered prostitutes and 3,991 registered prostitutes. Gathering data from 339 arrests, the researchers found that street prostitutes were generally young, unskilled, and well-paid:

They tended to work with pimps that were from the same area and clustered in neighborhoods where they could compete with regulated brothels. Street prostitutes not only generated profits for themselves but also for a whole bunch of actors, thereby switching the whole local economy to this industry, at the expense of the formal economy.

Economics Run Amok: What's Your Price?

Freakonomics is no stranger to studying prostitution, as discussed in Superfreakonomics.  We are slightly less familiar, however, with a gray area of prostitution — “dating websites” that connect rich customers with attractive poor customers.  Though these are by no means a new phenomena, a website has recently come to our attention that uses a dating website platform to ask what we all wonder about in one context or another: what’s your price? auctions off dates and claims to be inspired by the charity dating model.  It is divided into two halves: “Date Generous People” and “Date Attractive People” — apparently you’re either looking for one or the other.  Upon a cursory read, the generous users seem to be overwhelmingly male, and the attractive users overwhelmingly female (and pictured in bathing suits).   Each profile includes an “About Me” section and a “First Date Expectations” section. Several “attractive” members, it should be noted, specify that they will not fly Economy Class.

Bonn, Germany Taxes Prostitutes with Nightly "Parking Permits." A Deadweight Loss?

In Bonn, Germany, brothels and saunas pay taxes. Yet street prostitution is not taxed, so that the government has given streetwalkers a competitive advantage. To ensure fairness, the Bonn government has constructed meters along the main streets where the women solicit, with each woman required to purchase a “parking permit” of €6 each night.
As an economist, I would prefer to see hourly fees charged, but the costs of administering a fixed fee are much lower and probably yield greater net revenue. The only problem is that the fixed fee gives an incentive to shift work time toward fewer nights per week but more hours per night worked. A clear deadweight loss from this tax.
[HT to DJ]

Not the Kind of Customer Review You Read Every Day

You never know what you’ll run across while reading Yelp. While sussing out Philadelphia hotels, I came across this review:

First of all, let me just say that, if you can get a room, this is an excellent hotel. Don’t let the fact that a transgendered prostitute was arrested for killing an occupant here and tried setting fire to his room in November 2010. As with any hotel, you should be careful who you let into your room anyway.

The reviewer gave the hotel four stars out of five. It wasn’t the murder (which, though I was skeptical, was for real) that led him to deduct a star, but rather the low water pressure and bad hours at the fitness center.
And you wonder why companies are still nervous about the whole customer-review concept?

Prostitute Pay in India

We’ve written about prostitution more than a few times on this blog, and in SuperFreakonomics, we devoted an entire chapter to the economics of prostitution. Now comes an interesting bit of new academic research from India that draws similar conclusions: once you put aside your moral views, it’s not hard to see that entry into the profession is driven by salary and career options.

The Sportswriter Is a Pimp

Things have been rough in the journalism business of late — so rough that one veteran sportswriter felt he had to pursue an alternate career. An award-winning sportswriter for a paper in New Hampshire, has pleaded guilty to running a prostitution ring.

Sugar Daddy Dating

A Freakonomics reader (we’ll call her “Sugar Baby”) is documenting her two-week experiment with online “Sugar Daddy Dating”: “beautiful women post pictures while wealthy men post their income and voilà! – the perfect Darwinian couple is created. Because the expectation is short term, it’s flirting with the title of an escort service, or worse, prostitution.”

Look Who Just Decriminalized Prostitution

A Superior Court justice gutted the federal prostitution law in Ontario on Tuesday. This means that prostitution might become decriminalized throughout Canada, although it might not.

SuperFreakonomics Book Club: Allie the Escort Answers Your Questions

In the SuperFreakonomics Virtual Book Club, we invite readers to ask questions of some of the researchers and other characters in our book. Last week we opened up the questioning for Allie, a high-end escort whose entrepreneurial skills and understanding of economics made her a financial success.

SuperFreakonomics Book Club: Ask Allie the Escort About Her Work and Life

We have finally reached the end of Chapter 1, which brings us to Allie, the high-end escort whom we profile at some length. She has appeared earlier on this blog, answering some of our questions about the Eliot Spitzer affair. Now is your chance to ask Allie some questions of your own about her life and work as an escort.

Money Changes Everything

It’s legal to give certain things away for free, and illegal to sell them. Sex, for one. A few more of our favorites are inside this post. Can you think of other examples where money doesn’t necessarily make a practice illegal, but at the very least taboo or socially repugnant?

A Few Questions for Belle de Jour, Call Girl and Scientist

In 2003, a young American woman in London studying for her PhD. ran into money trouble. To support herself while writing her thesis, she joined an escort service. Under the assumed name Belle de Jour, she started to blog her experiences. That blog led to a series of successful, jaunty memoirs beginning with 2005’s The Intimate Adventures of a London Call Girl. The books were adapted for television in the U.K. (where she is portrayed by Billie Piper) and later in the U.S.

When More Money = More Syphilis

Over the last decade, the number of syphilis cases in China increased tenfold, according to this Associated Press report, because more migrant workers have been able to afford to hire prostitutes.

Going "Green" to Increase Profits

One of the hottest topics among business people is how to increase profits by being environmentally friendly. There are many ways to achieve this. At hotels, for instance, by not washing towels during a guest’s stay unless the guest asks, the hotel saves both money and the environment. Green innovations can be featured in advertising campaigns to attract customers. Another potential benefit of “going green” is that it makes environmentally-minded employees happy, increasing their loyalty to the firm.
A Berlin brothel has hit on another way to use environmental arguments to its benefit.

This Guy Is Obviously Not an Economist

Here’s an interesting article by a man who says he has slept with over 1,300 prostitutes.
If he were an economist, he would have kept track of the data and gotten a nice academic publication out of analyzing it.

Brothels, Buffets, and Disneyland

I read in a local newspaper about a bordello in Germany, where prostitution is legal, that charges customers a fixed fee: a bit over 100 euros ($140) for an evening of drinks, food, and entertainment.
This kind of pricing is common to amusement parks (Disneyland, for example), ski lifts, all-you-can-eat restaurants, and elsewhere. It is a way the firm can minimize the transactions costs of pricing each service and also, if the fixed price is set properly, extract the entire consumer surplus.

I Pay Them to Leave

A business exec told me that he thinks of consulting firms a bit like Charlie Sheen thinks about prostitutes. When I asked him to explain, he said that when Sheen was being sentenced for using a prostitute, the judge asked him why a man like him would have to pay for sex. And Sheen reportedly replied: “I don’t pay them . . .

Freakonomics Contest Winners: What Economists Really Have in Common With Garbage

Blog readers did not get nearly as worked up about economists and garbage as they did about prostitutes and rice, at least as measured by hate mail. I received not a single piece of hate mail from an economist (although, in fairness, none of the hate mail I got on the prostitutes post was actually from a prostitute either). We . . .