In the SuperFreakonomics Virtual Book Club, we invite readers to ask questions of some of the researchers and other characters in our book. Past Q&A’s can be found here.
We have finally reached the end of Chapter 1, which brings us to Allie, the high-end escort whom we profile at some length. She has appeared earlier on this blog, answering some of our questions about the Eliot Spitzer affair. Now is your chance to ask Allie some questions of your own about her life and work as an escort. Here are a few relevant passages from the book:
She [initially] set her fee at $300 an hour – that’s what most other women of her caliber seemed to be charging – with a few discount options: $500 for two hours or $2,400 for a twelve-hour sleepover. … Eventually she raised her fee to $350 an hour. She expected demand to fall, but it didn’t. So a few months later, she raised it to $400. Again, there was no discernible drop- off in demand. Allie was a bit peeved with herself. Plainly she had been charging too little the whole time.
But at least she was able to strategically exploit her fee change by engaging in a little price discrimination. She grandfathered in her favorite clients at the old rate but told her less- favorite clients that an hour now cost $400 – and if they balked, she had a handy excuse to cut them loose. There were always more where they came from.
It wasn’t long before she raised her fee again, to $450 an hour, and a few months later to $500. In the space of a couple of years, Allie had increased her price by 67 percent, and yet she saw practically no decrease in demand. Her price hikes revealed another surprise: the more she charged, the less actual sex she was having. At $300 an hour, she had a string of one-hour appointments with each man wanting to get in as much action as he could. But charging $500 an hour, she was often wined and
dined — “a four-hour dinner date that ends with a twenty-minute sexual encounter,” she says, “even though I was the same girl, dressed the same, and had the same conversations as when I charged $300.”
The downside [of working without an agent] was that Allie had no one but herself to screen potential clients and ensure they wouldn’t beat her up or rip her off. She hit upon a solution that was as simple as it was smart. When a new client contacted her online, she wouldn’t book an appointment until she had secured his real name and his work telephone number. Then she’d call him the morning of their date, ostensibly just to say how excited she was to meet him.
But the call also acknowledged that she could reach him at will and, if something were to go wrong, she could storm his office. “Nobody wants to see the ‘crazy ho’ routine,” she says with a smile. To date, Allie has resorted to this tactic only once, after a client paid her in counterfeit cash. When Allie visited his office, he promptly located some real money.
But she categorically insists that her clients wear a condom. What if a client offered her $1 million to have sex without a condom? Allie pauses to consider this question. Then, exhibiting a keen understanding of what economists call adverse selection, she declares that she still wouldn’t do it – because any client crazy enough to offer $1 million for a single round of unprotected sex must be so crazy that he should be avoided at all costs. About 60 percent of her appointments were for a single hour.
[After trying her hand at real-estate sales], finally Allie realized what she really wanted to do: go back to college. She would build on everything she’d learned by running her own business and, if all went well, apply this newfound knowledge to some profession that would pay an insanely high wage without relying on her own physical labor. Her chosen field of study? Economics, of course.
Please ask your question in the comments section below — you know the limits, people — and, as always, we will post the answers in short course.
Addendum: Allie answers your questions here.