The Economics of Selling Sex – Part One

Steven Levitt from the University of Chicago is best know to putting modern Economics in the hands of the normal person in his book "Freakonomics."

In a American Economic Association meeting, he discussed the Economics of Prostitution in Chicago and what has been found.

He found things like that half of the cities arrest take place in just 0.3% of the street corners. This is because the search costs are very high for clients and workers to find each other.

The other part I found interesting was that the incomes were high for the prostitutes. This proves why they are in this industry and no in others. The average rate was $25-30 bucks an hour.

He also found that the chance of getting assaulted was once a month and that the police hardly ever caught them. The chance was higher for them to have sex with a police officer than to be caught.

My favorite part, as an economist, is that they were able to price discriminate. The prostitutes perceive white men to be richer than black men. White men then get charged more and the workers ask them to name a price first. They give a price to black men first.

This is obviously not good for the poor white man and very good for the rich black man. I guess stereotypes do work out for some people.

A surprising fact is that prostitutes who were more attractive did not get higher rates.

Published in: on March 27, 2008 at 2:42 am  Leave a Comment  

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