I’m presently at the American Economics Association’s annual meetings in New Orleans, enjoying listening to research on peer effects, teacher labour markets, the economics of the media, and field experiments. But the most entertaining is Steven Levitt’s latest paper, which is about street prostitutes. Coauthored with sociologist Sudhir Venkatesh (With whom Levitt wrote a previous famous paper on drug dealers), the research is nothing short of ingenious. Levitt and Venkatesh employed former prostitutes to collect “trick-level” data from Chicago (covering a couple of hundred prostitute and a couple of thousand tricks), which they then combined with police arrest data.
The paper presentation was “preliminary and incomplete”, and my observations are based on scribbling notes while Steve spoke. So bear those facts in mind in reading my observations below.
Things I learned about this market:
- Very few prostitutes get arrested. Levitt told us that a Chicago street prostitute is more likely to have sex with an on-duty police officer than to get arrested by a police officer.
- Chicago posts mugshots of convicted prostitutes and clients (“johns”) online.
- One of their three neighbourhoods is Washington Square Park, a few blocks from the University of Chicago (and Levitt’s house).
- Prostitutes who work with pimps have higher wages and better conditions (largely because pimps drum up supply).Â
- Reflecting this, many of the prostitutes who didn’t have pimps asked Levitt and Venkatesh if they could please link them up with pimps. L&V planned a randomised experiment (randomly assigning prostitutes to pimps), but before they could carry it out, the pimps got angry at Venkatesh and told him that he would be killed if he returned.Â
- Most women work 11 hours a week, and charge $40-80 per trick. Including waiting time, they make $25-40 per hour. This compares with the $7-10 per hour they make in the formal sector.
- They are violently victimised once a month. About 1/5th of their tricks are ‘freebies’ for police or gang members.Â
- Condoms are not the norm. Using them only brings down the price by about 10%. This differs from developing countries, where condom usage rates are higher, and the price difference is larger.
- Levitt cited evidence that in the 1930s-50s, a very large share of men had their first sexual experience with a prostitute. With the rise of premarital sex, this is no longer true, so the market that’s left today is much seedier than in the past.
- On 4 July, there are large family reunions in Washington Square Park. The authors use this as an exogenous demand shock, driving up demand by 60% and prices by 30%. This suggests that supply is quite elastic, adjusting on three margins – higher labour supply by existing prostitutes, in-migration by prostitutes from other areas, and ‘temporary prostitutes’ joining the market.
A preliminary draft of the paper is here.