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A great reading in my studies today. I came across this article and it struck a chord. I have always been facinated by the forray into the prostitution world (maybe do a documentary on showcasing London, in particular) but I also admire Steven Levitt for his consistently hard work in socio-economics.
A bit is sourced from wikipedia and the italicized part is from my textbook.
One of the key books my sister recommended I read was "Freakanomics," a 2005 non-fiction book by University of Chicago economist Steven Levitt and New York Times journalist Stephen J. Dubner. The book has been described as melding pop culture with economics, but has also been described as "amateur sociology". By late 2009, it had sold over 4 million copies worldwide (sourced http://en.wikipedia.org/wiki/Freakanomics)
The book is a collection of 'economic' articles written by Levitt, an expert who has already gained a reputation for applying economic theory to diverse subjects not usually covered by "traditional" economists; he does, however, accept the standard neoclassical microeconomic model of rational utility-maximization. In Freakonomics, Levitt and Dubner argue that economics is, at root, the study of incentives (sourced http://en.wikipedia.org/wiki/Freakanomics)
Although I read the book a few years ago (specifically 2010, I believe), it touched on a lot of issues that were common sense (like the popularity of names depending on the decade of the baby's birth or the socio-economic background of the parents coupling that with the parents education).
The book's topics are here:
■Chapter 1: Discovering cheating as applied to teachers and sumo wrestlers (See below), as well as a typical Washington DC area bagel business and its customers
■Chapter 2: Information control as applied to the Ku Klux Klan and real-estate agents
■Chapter 3: The economics of drug dealing, including the surprisingly low earnings and abject working conditions of crack cocaine dealers
■Chapter 4: The role legalized abortion has played in reducing crime, contrasted with the policies and downfall of Romanian dictator Nicolae Ceauşescu (Levitt explored this topic in an earlier paper entitled "The Impact of Legalized Abortion on Crime.")
■Chapter 5: The negligible effects of good parenting on education
■Chapter 6: The socioeconomic patterns of naming children
OKAY...so my point of my post is here:
A NEW project Levitt worked on called, "The Economics of Prostitution." Yeah, you guessed it. The writer of the article depicts prostitutes making more money ($27/hour for 13 days a week) than if they were to work a minimum wage job. Their gross yearly salary is about $20,000 a year and with that, unfortunately, comes the services they provide to customers (about 10 sex acts a week).
Prostitues who work with pimps charge more-about $43/trick but their pimp snaps back a quarter of what they earn.
Here's the reading:
The Economics of Prostitution (Exploring Economics, pg. 250)
Steven Levitt of Freakanomics fame has just published a new work on the economics of prostitution in several Chicago neighbourhoods. He and his collegue Sudhir Alladi Venkatesh paid 159 prositutes $150 a week to participate in the study and hired trackers , often former prositutes, to fill out "event tracking sheets" right after the "events" were performed., with details of the acts, prices charged, the customers's demographic data and so on.
Chicago prostitutes, they found, average about $27 and hour and work about 13 hours a week during which they average 10 sex acts, for an income of about $20,000 a year--not much given the dangers and degradation of the job, but a lot better than the $7 an hour they average in the daycare, babysitting, hair styling, lawn care ad so on that is their typical employment alternative.
Prostitutes who work with pimps charge even more--an average $16 per trick more--and net more, even after giving their pimp a quarter of what they earn. You might think they're paying for protection, since they suffer fewer acts of violence at the hands of customers. In reality, the pimps make up for it with violence of their own. Working with a pimp does save girls the hassles of street-walkign or making their own bookings.
Pricing follows patterns own woul expect. More intimate or intricate acts cost more. Prices are lower on Mondays, when business isslowest (it's brisk on Fridays). There's a shocking amount of unprotected sex--80% for all acts--and only a small discount for use of a condom. Repeat customers pay less and so do black customers--$8-$9 less per trick--a strange example of price discrimination by race. And the odds of selling services to a cop or giving them away as goodwill are actually greater than the odds of being arrested by one. Using Chicago's web-posted crime data (chicago.everyblock.com/crime), Mr. Levitt and Mr. Venkatesh calculate that there's an average of 453 tricks per prostitution arrest.
The most intriguing result is the Fourth of July effect. Because of various Independence Day street festivals there's a 60% increase in demand that week, which brings about a 30% increase in price, which in turn attracts new suppliers to teh market--both out of towners and women for whom the regular prince isn't sufficient inducement but the higher holiday price will do.
Mr. Levitt and Mr. Venkatesh didn't do any sampling during February, so they don't actually know if Valentine's Day is good or bad for business. But whether prices are up because business is booming or down because everyone's home eating chocolate, you're almost certainly better off finding another way to celebrate.













