New Study On The Economics Of “Street Prostitution”

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University of Chicago economist Steven Levitt and coauthor Sudhir Venkatesh conducted a study which is based on surveys conducted with prostitutes and pimps in Chicago neighborhoods and incident data from the Chicago Police Department. Their focus seems to be on women prostitutes. Their working paper is here (pdf). The abstract is as follows:

Combining transaction-level data on street prostitutes with ethnographic observation and official police force data, we analyze the economics of prostitution in Chicago. Prostitution, because it is a market, is much more geographically concentrated than other criminal activity. Street prostitutes earn roughly $25-$30 per hour, roughly four times their hourly wage in other activities, but this higher wage represents relatively meager compensation for the significant risk they bear. Prostitution activities are organized very differently across neighborhoods. Where pimps are active, prostitutes appear to do better, with pimps both providing protection and paying efficiency wages. Condoms are used only one-fourth of the time and the price premium for unprotected sex is small. The supply of prostitutes is relatively elastic, as evidenced by the supply response to a 4th of July demand shock. Although technically illegal, punishments are minimal for prostitutes and johns. A prostitute is more likely to have sex with a police officer than to get officially arrested by one. We estimate that there are 4,400 street prostitutes active in Chicago in an average week.

This site notes:

What’s particularly interesting is the authors’ section on bargaining and the law. They estimate that roughly 3 percent of all tricks performed by prostitutes who aren’t working with pimps are freebies given to police to avoid arrest. In fact, prostitutes get officially arrested only once per 450 tricks or so, leading the authors to conclude that “a prostitute is more likely to have sex with a police officer than to get officially arrested by one.” When freebies given to gang members are factored in, about one in 20 tricks go solely for protection and the “privilege” of plying their trade.

The most depressing news is the woeful lack of condom use. Just as with recent studies of Mexican and Indian prostitutes, Levitt and Venkatesh find that payments go up substantially when condoms aren’t used. And plenty of johns are apparently happy to pay the premium: Condoms only get used about 20 percent of the time, the authors estimate. …

A somewhat different overview of the study is available here, where the author noted:

The numbers confirm the view that the life of a street prostitute is far from easy. The women were beaten up by their clients once a month on average and the sex acts requested by these clients were often “mind boggling,” Levitt said.

“The availability of premarital sex has largely crowded out standard garden variety prostitution,” Levitt told the packed room. “What’s left is a lot of stuff that the market of wives and girlfriends won’t easily provide.”

The current draft ends with this depressing sentence: “Surprising to an outsider are the fluidity with which these women move in and out of prostitution and other work, their willingness to absorb enormous risk for a small pecuniary reward, and the blurred lines between good and evil, where police extort sex and pimps pay efficiency wages.”

–Ann Bartow

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