Prostitution meets productivity

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From the venerable Economist today comes a take on the technological shake up of global prostitution.

WARNING: We rarely feel the need to alert readers to explicit content. But our discussion of the online sex trade requires frank language, and some may find the topic distasteful.

…We have analysed 190,000 profiles of sex workers on an international review site. (Since it is active in America, it was not willing to be identified for this article. A disclaimer on the site says the contents are fictional; we make the assumption that they are informative all the same.) Each profile includes customers’ reviews of the worker’s physical characteristics, the services they offer and the price they charge.

…The most striking trend our analysis reveals is a drop in the average hourly rate of a prostitute in recent years (see chart 1). One reason is surely the downturn that followed the 2007-08 financial crisis. Even prostitutes working in places that escaped the worst effects have been hit. Vanessa, a part-time escort in southern England, finds that weeks can go by without her phone ringing. Men see buying sex as a luxury, she says, and with the price of necessities rising it is one they are cutting back on. Even when she offers discounts to whip up interest, clients are scarcer than they were. In places where the job market slumped, the effect is more marked (whether prostitution is legal may affect prices, too, but the wide variation between American cities shows that this is not the only factor). The cost of an hour with an escort in Cleveland, Ohio, where unemployment peaked at 12.5% in 2010, has tumbled.

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Large-scale migration is another reason prices are falling. Big, rich cities are magnets for immigrants of all professions, including sex workers. Nick Mai of London Metropolitan University has studied foreign sex workers in Britain. He has found that as they integrate and get used to the local cost-of-living, their rates tend to rise. But where the inward flow is unceasing, or where the market was previously very closed, immigrants can push prices down.

…Our analysis shows how a prostitute’s hourly rate varies according to the nature of the services she provides and her reported physical characteristics. As in other bits of the economy, clients who seek niche services must pay more. Sex workers who offer anal sex or spanking earn on average $25 or $50 more per hour, respectively (see chart 2). Those who will accept two male clients at once or do threesomes with another woman command a larger premium.

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Appearance matters a great deal. The customers who reported encounters to the website we analysed clearly value the stereotypical features of Western beauty: women they describe as slim but not scrawny, or as having long blonde hair or full breasts, can charge the highest hourly rates (see chart 3). Hair that is bleached too unconvincingly to be described as blonde attracts a lower premium, but is still more marketable than any other colour. For those not naturally well endowed, breast implants may make economic sense: going from flat-chested to a D-cup increases hourly rates by approximately $40, meaning that at a typical price of $3,700, surgery could pay for itself after around 90 hours. The 12% share of women featured on the site who are described both as athletic, slim or thin, and as being at least a D-cup, suggests that quite a few have already taken this route.

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A prostitute’s rates also vary according to her ethnicity and nationality. What attracts a premium in one place can attract a penalty in another. According to our analysis, in four big American cities and London, black women earn less than white ones (see chart 4).

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We had too few data from other cities for a reliable breakdown by ethnicity. But Christine Chin of the American University in Washington, DC, has studied high-end transnational prostitutes in several countries. In Kuala Lumpur, she found, black women command very high rates and in Singapore, Vietnamese ones do. In Dubai, European women earn the most. What counts as exotic and therefore desirable varies from place to place, and depends on many factors, such as population flows.

Nobody does smut like the British.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.