Tag Archives: free market

The economics of prostitution

I’ve read a couple of interesting articles recently on the economics of prostitution so I thought I’d conflate them in a post. First of all, U.S. News & World Report wrote an editorial on a chapter in SuperFreakonomics about the subject. I enjoyed the earlier book, Freakonomics, by Steven Levitt and Stephen Dubner so I suppose I should pick up the sequel one of these days. Anyway it appears the authors have been getting some flak for that chapter because they asked the question: why don’t more women choose to become prostitutes?

According to their data, more women were prostitutes in the past, 1 out of 50 American women in the 1910s. This is because prostitution used to be much more lucrative. The wage premium for prostitutes however declined over time as society became less uptight about sex and men found it easier to find willing sexual partners without having to pay for it. This is straightforward demand and supply. The authors claim that during holidays, such as 4th of July weekends in the U.S., demand for prostitutes spikes and prices go up accordingly. This is apparently enough incentive for women who hold normal jobs to become prostitutes just for that particular time of year.

Similarly, The Economist reviewed a book last month on prostitution in Georgian London. The book, bearing an extremely long title The Secret History of Georgian London: How the Wages of Sin Shaped the Capital similarly claims that prostitution was much more prevalent in the past. In the case of 18th century London, up to 1 in 5 women were engaged in the sex trade and fornication in public was apparently commonplace.

This book points out a different, but related, reason why more women chose to become prostitutes in the past. Because widespread prejudice kept women out from many jobs that were available to men only. As women in the workplace became more readily accepted and young girls could gain a better education with the financial opportunities that entails, the relative premium of prostitution was reduced.

Both examples indicate that surprise, surprise, the flesh trade is as much subject to demand and supply as any other form of market transaction. This suggests that if government authorities around the world were really serious about reducing the numbers of women who choose to take up the profession, decriminalizing it, if not outright legalizing it, would be the way to go. As with drugs, the illegal status of prostitution merely serves to  inflate the market price of the “product”, thereby increasing the supply of women who are drawn to it. Meanwhile stricter social attitudes make young men more sexually frustrated, increasing the demand side of the equation.