Despite being called the oldest profession in the world, little is known about how this unique market works. A recent study sheds light on the business of selling sex in the city of Chicago and finds that it is much like any other business.
The Price of a Trick
The fee for a trick varies with the type of sex act, and prostitutes seem to discriminate across clients in order to maximize profit. White men pay $8 to $9 more per trick than black customers, with Hispanic clients paying some amount in between. When bargaining, prostitutes will usually offer a price to a black customer but will make a white man throw out a number first. Repeat customers pay slightly less than new customers.
[This article has been reproduced with permission from Capital Ideas, the research journal of University of Chicago's Booth School of Business http://www.chicagobooth.edu/capideas/ ]
This article discusses the economics of prostitution - but does it neglect the huge power of culture? This issue is discussed in this documentary on prostitution in India - http://www.vbs.tv/en-gb/watch/the-vice-guide-to-travel/prostitutes-of-god-episode-1
on Sep 23, 2010This was very well covered in the book Freakanomics. This analysis can also be used in trying to identify the motivation and triggers for "simple economic crime like evasion". In India tax evasion is so common it is like prostitution and it is likely that in India black money/evasion is even older. The key to evasion is that "both parties benefit while the loser is not visible (family) or does not deserve attention (government)". It flourishes even more where there is corruption and mushrooms with facilitators (like pimps in prostitution). So in any Government department there are plenty of touts and agents created by the system designed by politicians and bureaucrats. They provide mental comfort with minimal law enforcement,messy infrastructure, chaotic unhygeinic environments where apparent chaos seems to prevail. But it is perfect environment as in prostitution. Hence wherever we have a sales tax office, a court, a Regional Transport Office (RTO), any tax collection spot. They all resemble the red light districts. Touts hanging around, and any innocent could not find the office or the officer but the touts are so easy to find. They come to you at every corner and provide the exact need without much briefing or explanation. One instruction or a sign and anything can be arranged depending on the value. So any Tax design that expects compliance at the end of chaotic supply chain where both the seller and buyer can gain through evasion is a bad design. Tax evasion at that last stage with the given environment as described above could never get compliance. We can conclude that India may be the only country that even if there were ZERO taxation there will be rampant evasion!! Make sense of that Mr Levitt and you could actually have a way to control prostitution.
on Aug 6, 2010This similarity between the situation in Chicago and Mumbai is so striking that it is eerie. It is also shocking that prostitution in the developed world is as risky (in terms of hygiene) as that in the developing world.
on Jan 13, 2010An Interesting Study.Never thought that the Red Light Areas have a Business same as other ones.
on Jan 22, 2010