SuperFreakonomics Book Club: Sudhir Venkatesh Answers Your Prostitution Questions

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We recently introduced the SuperFreakonomics Virtual Book Club, wherein we’ll regularly invite readers to ask questions of some of the researchers and other characters we wrote about in our new book. Last week we opened up the questioning for Sudhir Venkatesh, the sociologist whose fieldwork on street prostitutes in Chicago is the foundation of a long section of our first chapter. Here are his replies. Thanks to Sudhir and all of you for participating.

Q.

Do prostitutes want prostitution to be legal, why or why not? — Joe

A.

Sex workers may desire particular collective goods that come with legalized commerce– the capacity to use the courts and police, the erasure of stigma, and access to health regulations being some of the most substantial. They are, however, fearful that if the industry becomes completely legitimate, they will be bought out by those who can benefit from investments that create economies of scale. Just imagine what WalMart or Goldman Sachs might do if they had access to this industry.

Q.

The Internet has revolutionized prostitution. In short, is street prostitution a nearly dead industry? Also, what will become of pimps? I realize there will always be a certain base level of street prostitutes to serve addicts and thrill seekers, but certainly the sample size must be getting smaller every day. – Alex Churchill

A.

The Internet has transformed the possibilities for many players in the sex work industry, not just “prostitutes” per se. Those who dance, who provide sexual services via phone, and who run escort agencies have all benefited from use of the web. But we should note that there is a digital divide in sex work. Low-income, urban, and minority populations are really not able to take advantage of IT to the same degree. They may wish to, but the initial costs as well as the need for upkeep/maintenance exceed their capacities.

The sample size may indeed be getting smaller, but that may also be a result of gentrification. The fact is, mayors in Chicago, Baltimore, New York, Cleveland, etc, have proactively pushed their low-income populations out to the city’s edge. So we actually do not know for sure whether there has been a decrease, or whether we are simply not looking at the right place.

Q.

In the book, Levitt and Dubner estimate the size of the “pimpact” — the added value of pimp management — using variation over time in working for a pimp and a prostitute’s earnings. What typically is happening in a street prostitute’s life that might cause her to leave employment with a pimp? Is she usually fired for some reason (and if so, what are typical violations that would get her fired), or does she leave for her own reasons? — anonymous

A.

Pimps provide their sex workers a steady client base and protection against the wanton abuse of a client. But, like any manager, they can extract concessions from their workforce that are viewed (by the worker) as unfair. Often, they ask the sex workers in their employ to give “freebies.” They may ask sex workers to work longer hours, to work overtime, and so on without fair remuneration. A pimp is no different than a corporate manager in these respects. So it’s not surprising that the worker gets frustrated and exits. Or she or he could become frustrated, not show up for work, and be fired.

Q.

Have you found any economic justifications that could be used as an argument for legalization? — Michael K

A.

As long as we break down “legalization” into its component parts, I’m willing to move forward and consider what it may mean to have a regulated sex-work industry — which, in fact, we already do have to some extent. First, legalization could open up the possibility for safer health practices: use of condoms, testing, ensuring that sex workers have access to health care, shelters, etc. In my view, these things would definitely need to be addressed.

Second, we know that when illegal practices become legalized (alcohol, drugs, etc.), workers who lack the capital for investment quickly become susceptible to those who are able to take advantage of economies of scale. If prostitution moves into a for-profit space, the sex workers themselves will be at a severe disadvantage because they lack the capital to protect their investments. So we have several options. First, we can ensure that the workers have the capacity to collectively bargain– just as any industry leader is currently allowed to do. Second, we could limit sex work to nonprofit auspices– perhaps temporarily giving the workers and their advocates a fair shot at controlling their work environment. Otherwise we could get big banks using federal money to wipe out the little guy, or gal. Legalization also means access to judicial institutions, and this raises a host of problems viz. ensuring that sex workers have the capacity to defend themselves in a court of law. Currently, they do not. All this is to say that legalization is intriguing, but it is often invoked as an easy fix to a complex problem.

Q.

How do the various prostitutes who work for one pimp relate to one another? Is there a sense of a “team” among the group or a sense of competition? Did any of the women work together to better their working conditions, to deal with clients, to deal with a pimp? — deborahb

A.

Sex workers are actually quite invested in building and maintaining collective relationships. They do so much better than most workers, and indeed, they need to do so in order to deal with the dangers associated with sex work– e.g., monitoring police, responding to abuse, following a john who committed theft. They usually form groups, and this may depress individual competition– although it can generate considerable animosity between groups who are fighting for sales spots or access to clients.

Q.

What do the women do with the money they earn? Do they save any of it? What do they spend it on?
> — LP

A.

Those who work at the so-called “higher end” of the sex work trade have considerable difficulty with cash reserves. It is not so easy to buy property, open up a checking account, establish a line of credit, etc. So many build alliances with family members or open up independent consulting businesses in order to get rid of cash and create investments for their money.

Q.

SuperFreakonomics suggests that prostitution is a substitute for unpaid sex. Since sexual morals have loosened over the last few decades, unpaid sex has been increasing. As a result, the demand for prostitution has been dropping. Do you think there are other goods that serve as substitutes for prostitution that have altered demand for prostitution in recent years? Internet pornography seems to me to be an obvious example that got no mention in SuperFreakonomics, but perhaps an increase in other entertainment options such as video games, webcams, and digital TV channels has had an effect. — David

A.

I’m not sure I agree that prostitution is a substitute for unpaid sex, at least not for all social classes. They may correlate, but that doesn’t mean that the relationship between the two merits such an argument. But, hey, what do I know. I’m only a sociologist.

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  1. Ted H says:

    just a few comments:

    “that come with legalized commerce … erasure of stigma,”

    Since when does legalization of a behavior imply an erasure of stigma? Legalize crack tomorrow and see if suddenly crack users no longer are stigmatized by society. When something is made illegal because of the stigma attached to it, making it legal doesn’t magically remove the stigma. If prostitution were legalized it would still take several generations for it to even have a chance of it being reasonably accepted as a legitimate profession; at least in current American culture. I’m shocked a sociologist is completely ignoring the cultural angle.

    “They are, however, fearful that if the industry becomes completely legitimate, they will be bought out by those who can benefit from investments that create economies of scale.”

    You haven’t seen this in countries where the practice is mostly legal. There is no multi-national conglomerate Prostitutes Inc. with their global headquarters in Amsterdam. There might be some brothels that own more than one, but nothing like Venkatesh describes.

    “Second, we know that when illegal practices become legalized (alcohol, drugs, etc.), workers who lack the capital for investment quickly become susceptible to those who are able to take advantage of economies of scale.”

    Legalization of a product is entirely different than legalization of a prostitution. They aren’t even comparable enterprises – hence why where prostitution is legalized you do not see an “economy of scale.” Also, what is an economy of scale in this context anyway ? How exactly would a prostitution firm see average costs fall as scale increased? The normal models for economy of scale aren’t even remotely applicable for this unique type of business. Not every industry or company reflects an economy of scale simply because it exists, and prostitution is one of them that likely wouldn’t.

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  2. Michael K says:

    I’m not sure Mr. Venkatesh answered my question but I do think he hit the nail on the head with his last statement, “All this is to say that legalization is intriguing, but it is often invoked as an easy fix to a complex problem.”

    I’m still interested if there is an economic advantage for legalization, and who it might benefit.

    For example, tax revenue generated by the workers, economy of scale lowering the price for customers, decreased law enforcement costs, etc.

    Also, I don’t think I agree with his statement, “If prostitution moves into a for-profit space, the sex workers themselves will be at a severe disadvantage because they lack the capital to protect their investments.” How are sex workers different from plumbers, carpenters, etc., or any other profession that generates income by physical labor?

    And finally, since Mr. Venkatesh brought up the legalization of previously illegal activities, i.e. alcohol, who or what suffered the most after prohibition was repealed?

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  3. Robin says:

    Ted, I believe prostitution certainly can benefit from an economy of scale. There is administrative overhead involved in scheduling clients, which would most likely drop on a per prostitute basis in a larger firm. A larger firm might have lower costs to acquire new customers due to its size. The prostitutes also need commercial space to work in, which would probably be less expensive on a per square foot basis for a larger operation. Customers can also be offered more variety in a larger operation employing more prostitutes.

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  4. PaulD says:

    Most laws against prostitution were instituted at a time when there was a strong taboo against extra-marital sex. Now that casual sex and living together are both common, I have a hard time understanding why it is illegal. Our legal system doesn’t have a problem with the sex, apparently, just with the fact that money is changing hands.

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  5. JE says:

    Legalization would probably cut down on the spread of disease.

    Business would probably pick up because guys wouldn’t be as scared about getting a disease, getting ripped off, or getting arrested. It wouldn’t need to be transacted in seedy hotels or neighborhoods.

    Better looking girls would get into the business if the stigma were reduced so the prices might go up. The ugly girls would be forced out of the business unless they did the more kinky stuff.

    Instead of street walkers there would probably be clubs like in Australia or Nevada where there would be bouncers instead of pimps handling security. These brothels would be able to handle scheduling so customers would have a good range of choices. The web advertising would probably show the actual girls instead of shots stolen from Playboy. The girls would be free to come and go, they wouldn’t be slaves to pimps or organized crime. They wouldn’t be coerced by police for special favors.

    You might recall that seedy strip bars by truck stops and airports got replaced by gentlemen’s clubs in downtown business distrcts in the 80′s. Instead of women down on their luck the girls were models, aspiring actresses, college students earning tuition, and single mothers. A lap dance by a pretty women became more desirable than a romp with a prostitute in the Age of Aids. In this economy the girl next door is probably a stripper.

    Now that women in our society are less stigmatized for enjoying sex the barriers to getting together for fun or profit are disappearing.

    Legalizing it would probably remove many of the dangers involved with prostitution.

    Associated crime would probably go down if it were legalized.

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  6. DaveyNC says:

    “They may ask … workers to work longer hours, to work overtime, and so on without fair remuneration. A pimp is no different than a corporate manager in these respects.”

    Heh.

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  7. misterb says:

    I’m intrigued by the picture of bankers from Goldman Sachs out competing on the streets for clients. I find the idea of greeters from Walmart being forced into the trade much more troublesome.

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  8. David says:

    There’s another possible complication with legalization.

    There are government safety net programs that essentially forbid people from turning down jobs. Specifically, consider AFDC. People on AFDC are typically young women, some of whom are very attractive. If prostitution were legalized, nothing would stop a brothel manager from checking on the prettier ones and offering them jobs as prostitutes, which they would be legally required to take, or lose all benefits. Good-looking single mothers would essentially be required to work as prostitutes or lose all possibility of benefits. This gets a bit too close to legalized rape, or at least major sexual harassment, for my taste.

    (To avert certain complaints, last I looked the average AFDC mother was on welfare for only a few years. There are the “welfare queens”, but they’re definitely in the minority. We’re talking about young women who have screwed up their lives and can use some temporary support to get themselves back on their feet, for the most part.)

    It would also be interesting to see how legalized prostitution would work with current sexual harassment laws. Right now, it’s illegal to require sexual favors from employees in exchange for being hired, not being fired, that sort of thing.

    My knee-jerk reaction is to legalize everything that doesn’t harm a child or nonconsenting adult, but legalizing prostitution is a lot more complicated than legalizing drugs.

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