Interesting article – have just ordered the book.

What will their next one be called – SuperDuperFreakonomics?

I guess I’ll take your word for it.

But I can’t shake this suspicion that freakonomics values wackiness, and striking, counterintuitive conclusions, at least as highly as it does careful, measured analytical methods….

Very measured article, perhaps more so than the original content of the book. I’d quibble with your use of the word “exploitation”, though. I am sure many pimp/prostitute relationships are exploitative but not for the reason you cite as being an element in any service job (btw what’s the significance of service as compared to manufacturing here?). It sounds like the pimp provides a front end, some price negotiation and some security, especially from unwanted customers, rather like a theatrical agent. I would say there is no exploitation taking place in those sort of relationships, unless the cab driver is exploiting me when I need them to get to work rather than under my own steam.

Where the exploitation creeps in is that safe methods of conducting prostitution have been artificially limited by state laws, thereby putting prostitutes in a more vulnerable position than they otherwise would be. They need to get more services that a pimp provides than they otherwise would have to if they had the full protection of the law, and laws adjacent to prostitution mean that those willing to provide those services are frequently going to be potentially dangerous criminals.

Taking the climate change chapter first, and with the caveat that I’ve not yet had time to exhaustively examine all the claimed examples of misrepresentation and/or technical errors cited by its critics

Well, William Connolley (who is about as far from alarmist as you’ll find in a real climatologist) gave up reading it after finding the first 10 major errors…

Their “rebuttal” doesn’t seem to actually touch on any of the errors of fact they have been accused of, of which there are many.

“Where the exploitation creeps in is that safe methods of conducting prostitution have been artificially limited by state laws,”

They do address this, if not in the book then in the original research that has been blogged quite extensively. One the of the principle roles of a pimp is to protect/screen prostitutes from policemen who otherwise claim ‘free’ services in return for ‘protection’.

I remember the original Freakonomics to be a complete load of total fucking wank.

A serious of uninteresting factoids strung along whilst being constantly told that there was a unifying theory…which never emerged.

Shite faux-intellectual bollocks.

had Allie opted, by choice, to solicit for punters on a street corner in the Projects instead of plying her trade Uptown, her experience of prostitution would have been no different to that of LaSheena’s

Naturally. And if David Cameron, having left Oxford, had chosen to work as a minicab driver, then his experience of that job would have been no different than that of a Nigerian immigrant. Or, to make a more fungible analogy, had Rupert Murdoch chosen to be a blogger rather than a media mogul, then he would have no more political and financial clout than I do.

But to point out that all that the people on the privileged end of any economic continuum have to do is give up their privilege in order to be just like the poor is a bit like saying that blind people could see if only they could, you know, see. Um, yes – but what does that actually tell you about the market?

The gap in privilege between Allie and LaSheena, you say, does not influence the market. But the gap in privilege interacts with the market at the point where economy and society intersect. Rather than smugly point out the blindingly obvious (rich educated white people are better off than poor drug addicted black people) and call that economics, I would like to see a serious anlysis of what it is that pushes women like LaSheena into prostitution in the first place. I think that is what people are finding disappointing about the book – the sense of unfulfilled promise, of a wasted opportunity to say something interesting about exploitation of women for sex.

You say that street prostitutes make more money than they would have been able to do in legitimate jobs, and you seem to imply that that is just an A-Okay explanation for prostitution. In fact, if they can make so much money doing it, why don’t more of them do it? Silly women.

I think the more pertinent questions would be a) why does prostitution pay better than other unskilled jobs? If there is really nothing special about it, it’s just economics, honest guv, not trying to tittilate or be contrarian at all, then why should giving head carry a premium that making sandwiches in a coffee shop doesn’t? And b), what are the market forces that push women into a choice between a variety of poorly paid and potentially dangerous jobs in the first place? How does the Freakonomics paradigm explain the South Side itself, nevermind cherry picking one example out of it and saying that yeah, while her life sucks, it might have sucked even harder if she’d been a night cleaner at an office building?

The problem with these two questions is that we all know the answers to them, and they are boring, boring, boring. You wouldn’t get much insousiant banter out of admiting that by the actions and attitudes of our own society, there definitely is something different and ethically distinct about sexual relationships, even if that makes out liberal asses squirm with an uncomfortable recognition of out shared moral heritage; and you wouldn’t get a fifty comment thread on a blog called “Liberal Conspiracy” by pointing out yet again that social injustice and economic inequality are really bad things that force people to do nasty and dangerous things just to survive. You’d get a pat on the back and no trackbacks.

Very interesting article. Probably won’t buy the book, but useful nonetheless.

@6: “factoids” they certainly are. Wouldn’t call them “uninteresting” however.

‘Its a matter of complexity and, getting a little technical for a moment, chaos theory, non-linearity and the physics of phase transitions – the global climate is just too big, too complex and way too unpredictable for anyone to do the maths necessary to create an kind of accurate climate model, no matter how much money and computing power gets thrown at the problem’

That’s the crux of the problem: most people demand certainty. They find chaos scary, not fascinating. 20 years ago you couldn’t walk down a street without tripping over a Mandlebrot set.

You can demonstrate infrared absorbtion with a laser and a fish tank full of farts (schoolkids would love it) but the effect this would have on an atmosphere is impossible to predict with any degree of accuracy; nevertheless to deny climate change exists for this reason is like denying droplets will form on a steamed-up window just because you don’t know where they’ll appear.

Back to you on the economics of prostitution when I finish GTA IV.

I would like to see a serious anlysis of what it is that pushes women like LaSheena into prostitution in the first place.

Then feel free to write one – or maybe just look up of the many existing studies that cover that side of the issue.

There is already an extensive body of published literature in the field to draw on, although I would suggest you exercise a degree of caution in choosing your sources as its a field that’s heavily prone to political bias.

If you start with Melissa Farley or Julie Bindel then you won’t get much more of answer that ‘Men’, but if you’re prepared to spend some time looking through Petra Boynton’s blog – http://www.drpetra.co.uk/blog/ – then there are plenty of links and references to get you started.

That’s really the point here, Levitt and Venkatesh’s research goes some way to filling a significant gap in existing research, its not an attempt to deliver a definitive study of prostitution and if read as that its an entirely satisfactory contribution to the field and one that I suspect will be picked up and built on in the future.

I remember the original Freakonomics to be a complete load of total fucking wank.

Then you must have missed the interesting stuff.

To be fair, too much attention gets paid to Levitt’s left-field ideas, for example the correlation between abortion and crime rates, and that does rather take the attention away from the real meat. His paper on crime rates in NYC is still the most comprehensive debunking of the myth of zero tolerance policing you’ll find anywhere, especially if you take the time to dig out the full paper.

Dunc:

I’d suggest you read Dubner’s account of the furore over the Caldeira reference in full and think on the fact that Romm’s assault on this particular point has more or less set the template for everything that’s followed.

I’ve much to comment on in this thread but better in small lumps.

Perhaps the nearest counterparts in Britain to the study of prostitution in Chicago would be Belle De Jour -
Diary of a call girl, or arguably of greater relevance, Confessions of a Working Girl, by Miss S (Penguin 2007) with its sequel, Extra Confessions of a Working Girl, also Penguin.
http://www.amazon.co.uk/Confessions-Working-Girl-Miss-S/dp/0141032340

By her own account, Miss S decided to finance her higher education studies through part-time work in the massage parlour (cum brothel), located down the road from her student lodgings, instead of by the more regular method of accumulating student loans.

The book is engaging although much reads more like a lucid operations manual, with many passing helpful tips on best practice, than an exercise in lustful porn. Evidently, the book reached the best seller lists for I saw it displayed along with other top selling paperbacks in my local Tesco superstore. I have to assume that Tesco management was innocent of the contents, but that may not be entirely surprising after Sir Terry Leahy’s recent observations on our failing education system – after all, the book is published by Penguin:
http://www.guardian.co.uk/business/2009/oct/13/leahy-tesco-education-gordon-brown

The sequel of Confessions relates how Miss S moved on to London after qualifying (apparently in acccountancy) and there progressed to working in the lucrative escort market through an agency. Occasionally, I’ve come across dark hints in the media that other young women are following this or a similar business model to finance their higher education studies, which might just help to explain this news from a few years ago:

“WOMEN university students now outnumber men across all subject areas, from engineering to medicine and law to physical sciences.”
http://www.timesonline.co.uk/article/0,,2-2356965.html

Failing other comments, another installment from me:

Chicago University was the academic home base of Milton Friedman for 30 years. The university inevitably gained a reputation as the primary font of evangelical anti-keynesianism and what came to be called New Classical Economics. But the Chicago school of economics had a parallel tradition of applying rigorous economic analysis to more mundane, everyday issues. Gary Becker became the most prominent and distinguished exponent of this tradition with pioneering work on the economics of human capital:
http://www.econlib.org/library/Enc/HumanCapital.html

and an economic approach to crime and punishment:
http://www.ww.uni-magdeburg.de/bizecon/material/becker.1968.pdf

Steven Levitt belongs to this latter tradition:
http://pricetheory.uchicago.edu/levitt/home.html

His research into the prostitution market carries important implications for some fundamentals of the Friedmanite tradition.

What clearly comes out of Levitt’s researches is the persistence of substantial price differentials between the street and escort markets while both have been subject to increasing competitive pressures from non-professional providers of sex. This is curious because competitive pressures have not eroded the persistent price differential between the street and escort markets. Evidently, the prostitution market is highly “imperfect” but that is not how Friedman saw the world in general.

The mainstream Chicago view was that markets are either competitive or monopolised if and only if there are no close substitutes for a product and unusually substantial market entry barriers persist. The Chicago mainstream tradition had little sympathy for theories entertained in other economics schools about “monopolistic competition”, oligopolistic models or predatory pricing.

Levitt therefore comes across to me as subversive of the Chicago mainstream. I noted with interest that his early academic education was at Harvard and the MIT, not Chicago.

One obvious implication of the Levitt analysis is that markets don’t necessarily work well at arbitraging price differences and markets don’t necessarily clear quickly. But such conclusions are deeply heretical to the New Classical Economics tradition.

There’s a fascinating – but difficult – academic paper by Gary Becker on prices charged by restaurants and the like. If markets work, why is it that queues often form at fashionable restaurants, clubs and discos at peak times when mainstream price theory says that with excess demand prices will rise to clear the market?

Becker: A Note on Resturant Pricing and Other Examples of Social Influence on Price (JPE 1991):
http://research.chicagogsb.edu/economy/research/articles/67.pdf

“You say that street prostitutes make more money than they would have been able to do in legitimate jobs, and you seem to imply that that is just an A-Okay explanation for prostitution. In fact, if they can make so much money doing it, why don’t more of them do it?”

Well, for the obvious reason that many/most women don’t find that the money on offer compensates them for the parts of the job they don’t like. It’s an assumption made that all and any jobs are like this: wages have to be high enough to compensate workers for the shit parts of the job otherwise they simply won’t do it.

*I* wouldn’t go and be a trawlerman, given the pay on offer and the very high (comparative to other work) risks of death associated with it. But other people have a different risk profile than I do and some people do find that the higher wages suffice to get them to take those risks.

There’s nothing conceptually different about prostitution here. Some women (most? many?) are so revolted by the idea of near random commercial sex that they wouldn’t/don’t do it at Allie’s pay rates. Others have different revulsion (technically it’s usually called “repugnance”) levels and so need lower levels of pay to overcome them.

You can slot any job into this: there are plenty who wouldn’t work the 80 hours a week that The City demands even for those rates of pay. There are plenty much happier working fewer hours and earning less money and thus being able to do other things with their lives.

“I think the more pertinent questions would be a) why does prostitution pay better than other unskilled jobs? If there is really nothing special about it, it’s just economics, honest guv, not trying to tittilate or be contrarian at all, then why should giving head carry a premium that making sandwiches in a coffee shop doesn’t?”

This was (at least in part) well explained by Gary Becker decades ago. Prostitution invloves a degradation of social capital. Most obviously, it reduces the likely status of whatever mate one is able to attract. Thus wages must be high enough to compensate for that destruction of longer term value as embodied in social capital.

As Unity is pointing out, there’s been a lot of study of the economics of prostitution (and Becker certainly has been working or a long time on the substitutability between pre-marital sex and prostitution, the economics of the family and so on….leading to at least one conclusion that part of the fall from 19th century levels of prostitution has come from the invention of secure and reasonably priced contraception). and it’s a bit much to expect all of it to be explained in just one empirical paper.

“b), what are the market forces that push women into a choice between a variety of poorly paid and potentially dangerous jobs in the first place?”

Oh, that’s easy: it’s called poverty. The answer to which is, of course, wealth creation. Which is where all this economics stuff starts to come in useful: how do we create wealth?

From historical studies, I can’t recognise the image presented above of relatively well-paid prostitutes in the 19th century, at least in London – which at the time was the largest and most affluent city in the world:
http://www.portcities.org.uk/london/server/show/ConNarrative.111/chapterId/2347/Prostitution-in-maritime-London.html

By several accounts, there were tens of thousands of prostitutes in London, including much casual prostitution by young women to augment poor pay from factory working or domestic service.

In France, at the time, brothels were legal, hence the accounts of the lifestyle of Toulouse Lautrec or the childhood and upbringing of Edith Piaf. No picture emerges of a luxury lifestyle for the prostitutes of their acquaintance.

The impression left by Frank Harris’s autobiography (Lives and Loves) or other published, but anonymous, diaries, is that enthusiastic amateurs were more prevalent than the received notions of Victorian morality allow us to credit:
http://en.wikipedia.org/wiki/Frank_Harris

“Prostitution involves a degradation of social capital. Most obviously, it reduces the likely status of whatever mate one is able to attract.”

Nevertheless, there are many accounts of US servicemen marrying bar girls met during tours of duty in Asian countries and much the same can be said of many Anglo-Indian marriages contracted during the Raj:
http://www.geocities.com/deefholt/childrenraj.html

William Donaldson – famously the author of the Henry Root hoax letters – was once accurately described by Kenneth Tynan, the theatre critic, as a moderately successful Chelsea pimp:
http://en.wikipedia.org/wiki/William_Donaldson

It takes all sorts.

@3: btw what’s the significance of service as compared to manufacturing here?

Possibly that service industries tend to mere labour-intensive than manufacturing industries and cutting labour costs is therefore more important to them?

Possibly that service industries tend to mere labour-intensive than manufacturing industries and cutting labour costs is therefore more important to them?

Actually, its more that pricing in service industries is more or less a direct function of labour value, where in manufacturing labour is used to add value to another saleable commodity, so the relationship is somewhat more indirect.

That is, historically, why at the lower unskilled/semi-skilled end of the labour market, manufacturing jobs typicallly offer better rate of pay than service industry jobs.

“That is, historically, why at the lower unskilled/semi-skilled end of the labour market, manufacturing jobs typicallly offer better rate of pay than service industry jobs.”

True, for there’s more capital being employed to boost the productivity of the labour.

However, the real difference between services and manufacturing is that it’s vastly more difficult to increase productivity in services and thus, given that average wages in an economy are determined by average productivity, (Baumol’s Cost Disease) services will become more expensive over time relative to manufactures (and the portion of the workforce in services will rise against that in manufacturing).

Which means that there really has been a huge change in prostitution given that we seem to have fewer of them and also they’re charging less relative to average wages than was the case in the past.

For those interested, I came upon this 2006 academic paper on: A Theory of Prostitution, by Lena Edlund and Evelyn Korn, in the hugely respectable and highly academic: Journal of Political Economy, published by Chicago University Press:
http://the-idea-shop.com/papers/prostitution.pdf

For a digest, there was this review in Forbes magazine, which is how I first learned of the paper:
http://www.forbes.com/2006/02/11/economics-prostitution-marriage_cx_mn_money06_0214prostitution.html

It’s an intriguing question as to what has prompted this upsurge in academic interest in the prostitution market place in recent years, as well as the spate of popular, best-selling paperbacks by service providers with an evident flair for writing about their trade. FWIW my impression is that most informed observers in affluent countries seem to converge in agreeing that the size of the market is in decline.

“It’s not that Levitt and Dubner are necessarily disinterested in the answer to that question, although its certainly a possibility, its simply the case that whatever the answer might be, or rather answers as this is a far from straightforward question, it lies for the most part, outside the sphere of economics. It falls outside their brief, so the leave it in the hands of the reader and ask them to figure it out for themselves.”

Which goes a long way to show why purely-economic analyses are limited in what they can do. And the study’s authors ask the ridiculous question of why more women don’t want to be prostitutes, knowing full well that the answer is simply outside of their field.

It’s like producing a (hypothetical) study finding that people who believe in God are less wealthy and concluding “The big question is why do more people not reject faith?” It’s an absolutely absurd comment for a piece focussing on economics.

“LaSheena and Allie’s different background have no effect on the market itself, they merely determine the point at which its possible for them to enter the market”

Which is true but a completely pointless thing to say. Remember, the question was “Why do more women not turn to prostitution?” Surely an excellent answer to this that even frenzied economists can handle is this: “Because only a small proportion of women could enter the market in Allie’s position, and they are the most likely to already be economically comfortable anyway.”

“There is no ‘blind spot’ in Levitt and Dubner’s analysis because the prostitution market operates entirely independently of the social, cultural, ethnic and economic backgrounds of the individuals who participate in that market.”

I’ve got to simply call bullshit on this. So the market for prostitutes is completely colour-blind? The colour of your skin won’t affect the colour of your punters’ skins, and so their likely economic group? Get a grip!

I recognise that it’s fashionable among some to want to denigrate economists but try instead: A Theory of Prostitution, by Edland and Korn.

Their (interesting) focus is not only why do prostitutes usually earn so much more than girls working in ordinary occupations but why are there usually more prostitutes in poor countries than in affluent countries. As said above, I’m not convinced that in 19th century London or Paris, prostitutes typically did make good earnings, possibly because there were so many.

Btw in case you missed this, a law change in Germany in 2002 fully legalized brothels and allowed prostitutes to sign regular employment contracts, although there are restrictions meant to prevent forced prostitution.
http://en.wikipedia.org/wiki/Prostitution_in_Germany

Compare that with the proposal two years ago by the Rt Hon Harriet Harman MP, leader of the House of Commons, to make it illegal to pay for sex:
http://news.bbc.co.uk/1/hi/7153358.stm

Which is the more enlightened? Which provides greater protection for those working the trade?

As for claims about the supposedly “high” earnings of prostitutes, try these press reports from a year ago about business in London:

“Prostitutes in the capital are selling full sex for as little as £15, new research showed today.”
http://www.independent.co.uk/news/uk/home-news/sex-industry-in-every-corner-of-london-918453.html

“During 120 hours of telephone calls, we established the following: at least 1,933 women are currently at work in London’s brothels; ages range from 18 to 55 (with a number of premises offering “very, very young girls”); prices for full sex start at £15, and go up to £250. . .

“Of the brothels researched, 85% operate in residential areas. Almost two-thirds are located in flats and more than one-fifth are in a house. Wherever you are in the city, the likelihood is that buying and selling women is going on under your nose.”
http://www.guardian.co.uk/lifeandstyle/2008/sep/10/women.socialexclusion

Rather than economists in Britain looking for theoretical explanations for the relatively high earnings of prostitutes, they evidently need to explain the extent low earnings – which is what I suspected.

“Well, William Connolley (who is about as far from alarmist as you’ll find in a real climatologist)…”

William Connelley isn’t a climatologist and never has been. He was a climate modeller at the British Antarctic Survey. His main claims to fame are as a Wikipedia admin who repeatedly poisons the well (and the biography) of any person he doesn’t like, as one of the founder members and chief censors of the RealClimate political blog and as a repeat candidate in local elections for the neo-Marxist Green Party.

He is an alarmist and a propagandist of long standing. His pages on Global Cooling are typical of his output: ridiculously slanted and sneering historical revisionism.

It’s amazing the press he gets is so fawning given his extremely illiberal views on just about anything.

I’m always amazed how ignorant of William Connelley people are. He should be much better known. Here’s one long standing (and real) environmentalist on Connelley’s real pursuit of propaganda: http://network.nationalpost.com/np/blogs/fpcomment/archive/2008/04/12/wikipedia-s-zealots-solomon.aspx

@25

What? All I can see there is a huge amount of opinionated waffle from people who just don’t seem to understand either Wikipedia’s rules or the fact that the correspondence theory of truth is somewhat old-fashioned.
http://plato.stanford.edu/entries/truth-correspondence/

I say this as somebody who is highly suspicious of the level of orthodoxy being enforced in the AGW debate.

You sure that’s the right link?