How Much for Anal? The Economics of Prostitution

How Much for Anal? The Economics of Prostitution

Whether the seller is male or female, a call girl, an escort, a streetwalker or a gigolo, he or she is contributing to a multibillion market: prostitution.  There are more than 40 million prostitutes working at this very moment, more than the entire population of Canada. The economics of prostitution is worth talking because the market is so huge!

The Opportunity Costs of Prostitution

In life a woman can’t be “a wife and a prostitute” at the same time. Men are biologically driven to want faithful wives. A man with a faithful wife can be sure he is the father of her children and that his genetic legacy is secure. The opportunity cost of a lady choosing to prostitute is to give up HER genetic legacy, as well as marriage, the possibility of raising a family, having another career, and social respect. These are VERY high costs; so the compensation (money that men pay) should reflect the cost.

The price range for a prostitute is vast. A prostitute in South Africa can make as low as $1/working day, but on the other extreme, a ‘high class escort’ in the US can make thousands of dollars a night (ex-New York governor Eliot Spitzer paid more than $10,000 US for a call girl). The price depends on the age, experience, location, type of intercourse, whether she has a pimp or not, whether the client knows the prices, etc.

The Opportunity Costs of Prostitution

The Economics of Prostitution

An interesting study by Steven D. Levitt (an economist) and Sudhir Alladi Venkatesh (a sociologist) from the University of Chicago looked at the economics of prostitution on the streets of Chicago. The study was based not only on police-reported data and US statistical databases, but also on  street level information collected from prostitutes and pimps that they contacted. Levitt and Venkatesh discovered:

  • Prostitutes get arrested only once per 450 tricks they perform
  • There are about 1,200 tricks performed per John arrested, and the prostitutes have less risk of being arrested if they have a pimp
  • Around 3% of the tricks performed by the prostitutes are ‘freebies given to police officers’ to avoid arrest
  • Prostitutes working with pimps have higher incomes than the ones working alone
  • White customers pay around $9 more than Black customers

Also, with the chart below (average of prices of White, Black, and Hispanic customers), we can see that, just like every good or service, a prostitute’s prices increase with a risk or marginal cost (additional effort and time in this case) increase.

The Economics of Prostitution: Graph of Average Price of Tricks by Type by Chicago Street Prostitutes.

The Economics of Prostitution: Graph of Average Price of Tricks by Type by Chicago Street Prostitutes.
Source: Steven LEVITT and Sudhir VENKATESH, Empirical Analysis of Street-Level Prostitution, Chicago, September 2007.

The Internet is Changing the Nature of the Sex Trade

In a study by Cunningham and Kendall, the Internet changed the economics of prostitution by increasing the prostitution market over the last 15 years, but also displacing the market of streetwalking in some age groups. Since prostitutes from 25 to 40 years old can easily switch to e-prostitution whereas younger and older prostitutes don’t necessarily have the means to do so. There are actually sites where you can rate the quality of the service received from a prostitute and where prostitutes can exchange comments about the clients they spent the night with. This creates an incentive for them to provide ‘quality service’ and the comment system allows them to know in advance what to expect with each client.

200 million dollars is spent on prostitution-related crimes in the USA. One could conceivably suggest just legalizing it. If done correctly it doesn’t harm anyone! But still, the problem with prostitution in most developed countries is not the about the act of paying for sex, it is about the associations with drug abuse, violence and human trafficking. E-prostitution reduces streetwalking, possibly also reduces violence against prostitutes, but the drug abuse and human trafficking elements are still present in this market.

With tens of millions of people in the prostitution industry around the world, should governments regulate or legalize the industry to protect human rights, or should it be a billion dollar secret? Can the economics of prostitution play a role in policy? Mindthis plans to dig deeper with an analysis on human trafficking coming soon.

Note that this article focused only on women being the ‘supplier’ of the good (sexual relations) and men being the ‘demanders’, men-to-men prostitution being much less prevalent and women-to-women almost unknown.

Milana Mihic

Milana Mihic

Originally from Bosnia & Herzegovina, Milana and her family moved to Canada to escape the dreadful after-war economy in the Balkans. Inspired by her past and after completing her degree in the sciences, she now passionately studies economics at the University of Ottawa with an intent to further her education with a Masters. Alongside economics she thoroughly enjoys languages as she is fluent in Serbian, French, Spanish and is working on expanding her Russian. Being an avid choreographer of a Serbian dance group and a dedicated volleyball player she is always living life to the fullest with purpose. After visiting the southern and central parts of Europe, she plans on discovering more cultures while working in the field of economics at various transnational corporations around the globe.

  • http://www.facebook.com/profile.php?id=649420042 Peter Guba

    I think the economics argument made for why prices vary and why they are so high is false. The reason why prices are so high is not because of a lifestyle opportunity cost but because of the male sex deficit. 

    At the point in time when a female makes the choice to become a prostitute, she’s not at a point in time where she can choose to be a middle class housewife with an education and kids, the opportunity analysis simply doesn’t occur, she does it out of necessity. It’s purely the male sex deficit, which happens to be really high (due to the libido imbalance between the male and female population), that drives up the prices. The varying prices between countries can simply be explained by the various incomes of the male population, complimented by the fact that the product market of sex is fairly inelastic (the prostitute can only provide sex to the local population and thus is dependent on their income levels to charge a respective price for her product).

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  • ZeroSum Analyst

    What about the psychological cost? How many prostitutes have access to other means of emotional safety (managing insecurities about appearance, self-esteem, hope for the future…)? Is there a retirement plan from this profession once someone wants to exit and find greener pastures?

  • Gustavus

    Interesting idea, but I’m skeptical whether you can call it science or merely hearsay journalism. Statistics on findings in one city is shaky at best, let alone two or three. I wont deny that anal is apparently a top rung “job”, but all I get out of this is how much I should offer a prostitute for services rendered. Seeing how quality and price depends so much on other factors I don’t know how any sort of average can be satisfied without making some further classification and therefore multiple price graphs. At the very least I know how much to spend on my next vice…

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  • Anonymous

    Canada for years and years has been a secret billion dollar business on human trafficking
    just years ago this came to the public because some one was working to take this serious on human rights

    Canada GOV used to have ads of prostitutes on their websites as advertising
    Toronto SUN, NOW, backpage and craigslist its fulled of ads from prostitutes who are in Canada illegal and never get deportation

    Canada GOV knows 50% of international students works as sex workers the immigration website of Canada used to have forms for sex workers applied to come in Canada as sex workers

    GOV knew about this secret billion dollar business