The Economics of Prostitution

The Economics Of Prostitution
by Michael Noer

Wife or whore?

The choice is that simple. At least according to economists Lena Edlund and Evelyn Korn, it is.

The two well-respected economists created a minor stir in academic circles a few years back when they published "A Theory of Prostitution" in the Journal of Political Economy. The paper was remarkable not only for being accepted by a major journal but also because it considered wives and whores as economic "goods" that can be substituted for each other. Men buy, women sell.

Edlund and Korn admit that spouses and streetwalkers aren't exactly alike. Wives, in truth, are superior to whores in the economist's sense of being a good whose consumption increases as income rises--like fine wine. This may explain why prostitution is less common in wealthier countries. But the implication remains that wives and whores are--if not exactly like Coke and Pepsi--something akin to champagne and beer. The same sort of thing.

As with Becker, a key differentiator in Edlund and Korn's model is reproductive sex. Wives can offer it, whores can not.

To be fair, Edlund and Korn were merely building an admittedly grossly simplified model of human behavior in an attempt to answer a nagging question: Why do hookers make so much money? Prostitution is, seemingly, a low-skill but high-pay profession with few upfront costs, micro-miniskirts and stiletto heels aside.

Yet according to data assembled from a wide variety of times and places, ranging from mid-15th-century France to Malaysia of the late 1990s, prostitutes make more money--in some cases, a lot more money--than do working girls who, well, work for a living. This held true even for places where prostitution is legal and relatively safe. In short, streetwalkers aren't necessarily being paid more for their increased risk of going to jail or the hospital.

Notwithstanding Jerry Hall's quip when she was married to Mick Jagger, about being "a maid in the living room and a whore in the bedroom," one normally cannot be both a wife and a whore. "Combine this with the fact that marriage can be an important source of income for women, and it follows that prostitution must pay better than other jobs to compensate for the opportunity cost of forgone-marriage market earnings," Edlund and Korn conclude.

Ouch.

Another zinger: "This begs the question of why married men go to prostitutes (rather than buying from their wives, who presumably will be low-cost providers, considering that they can sell nonreproductive sex without compromising their marriage)." Guys, nothing says "Happy Valentine's Day" more than "low-cost provider."

Of course, it's easy to pour cold water on some of the assumptions made in Edlund and Korn's mathematical model. But these so-called "stylized facts" are supposed to predict human behavior; they don't necessarily pretend to mirror it.

In particular, the assumption that there is no "third way" between wife and whore is problematic, if not outright offensive: "The third alternative, working in a regular job but not marrying, can be ruled out, since we assume that the only downside of marriage for a woman is the forgone opportunity for prostitution."

Be sure to let all your married friends know what they're missing.

Also, the emphasis on the utility of children is puzzling. In most Western democracies, fertility rates have plummeted as wealth has increased. Empirically, men not only buy fewer whores as they get richer, but they have fewer children.

Still, the economic analysis of marriage explains one age-old phenomenon: gold digging.

"In particular, does our analysis justify the popular belief that more beautiful, charming and talented women tend to marry wealthier and more successful men?" wrote Becker. His answer: "A positive sorting of nonmarket traits with nonhuman wealth always, and with earnings power, usually, maximizes commodity output over all marriages."

In other words, yes, supermodels do prefer aging billionaires. And Gary Becker proved it mathematically decades before The Donald married Melania.