How to sell sex

The Economist: Economists let some light in on the shady market for paid sex.

Steven Levitt (an economics professor at the University of Chicago and co-author of “Freakonomics”) presented preliminary findings from a study conducted with Sudhir Venkatesh, a sociologist at Columbia University. Their research on the economics of street prostitution combines official arrest records with data on 2,200 “tricks” (transactions), collected by Mr Venkatesh in co-operation with sex workers in three Chicago districts.

The results are fascinating. Almost half of the city's arrests for prostitution take place in just 0.3% of its street corners. The industry is concentrated in so few locations because prostitutes and their clients need to be able to find each other.

Prostitutes are more likely to have sex with a police officer than to be arrested by one.

Sex without a condom is the norm.

One controversial finding is that prostitutes do better with pimps—they work fewer hours and are less likely to be arrested by the police or preyed on by gang members.

In many respects, the paid-sex industry is much like any other business. Pricing strategies are familiar from other settings. Despite evidence of a myopic attitude towards risk, there have been plenty of recent examples of that in the finance industry too. Illegality and lack of regulation are likely to heighten public-health risks. The Ecuador study concluded that rigorous policing of street prostitution might limit the spread of STIs by directing sex workers into the safer environs of licensed brothels.