Prostitution econimics

I totally thought this blog on prostitution found at the Idea shop thinking about prostitution was hilarious.
It compares prostitution to marriage. The blog is based on a paper written by a man and woman who claim that prostitution, economically, may be the world’s oldest profession. Prostitution is said to be an inferior good. The best part of the whole blog for me was when it suggested that wife’s and prostitutes are substitutes. In definition from all I can tell marriage and prostitution are substitutes.
My skepticism comes into play when the blog said prostitution falls as men’s income rises. This doesn’t make sense. The more money one has the easier it would be for a that person to get sex with out any ties. Which makes me ask why would poor men be more inclined to pay for sex when they don’t have the money. Now that does not seem very economical to me.


Dr. Tufte said...

One note first: the blog cited here (the idea shop) often posts summaries of professional research, rather than just opinion about current events. That's the case here. This post is based on an article in The Journal of Political Economy. That is an extremely prestigious publication that you don't get published in without years of work on a project, plus new insights, unique data, a whole lot of luck (and some connections probably don't hurt either). Yours truly has written about 25 papers, and published about 15, and there was only 1 I ever thought was worthy of the JPE - and they rejected it.

The upshot of all this is that these results should be taken very seriously.

But, the author is right, it is hilarious a piece in some ways. Here's a few ideas to help clarify the issues.

First, a good has to be either inferior or normal (those two terms just divide up all goods into two groups using the income elasticity as a criteria). So, it makes sense for prostitution to be an inferior good. If it were a normal good, we would find prostitutes predominantly in rich neighborhoods, rather than in poor ones.

Second, a good is either a substitute or a complement for the same reasoning (the dividing line here is based on the cross-price elasticity of demand). So, it seems funny and a bit bizarre to say that prostitution and marriage are substitutes, but the alternative is that they are complements. I don't think there are a lot of husbands out there saying "Gosh I love you so much I have to get a prostitute involved in our relationship too".

I like the last paragraph of this blog. It makes sense to me (based on observation of the world) that prostitution is an inferior good, but I think the author is also right that more money would make it easier to "get sex with out [sic] any ties". I'm not sure which is right. Perhaps prostitution only appears to be an inferior good because the researchers didn't account for other factors - maybe it is a normal good, but that the opportunity costs (of, say, getting caught) are higher for rich men.

Wendy said...

Whores are my heroes!