Hat tip to this ABA Journal Daily News story, which reports Steve Levitt's (Chicago Econ / American Bar Foundation) and Sudhir Alladi Venkatesh's (Columbia Sociology) recent draft empirical analysis of street-level prostitution in Chicago. The following abstract provides some specific (and bleak) details on the economics of this profession:
Combining transaction-level data on street prostitutes with ethnographic observation and official police force data, we analyze the economics of prostitution in
Chicago. Prostitution, because it is a market, is much more geographically concentrated than other criminal activity. Street prostitutes earn roughly $25-$30 per hour, roughly four times their hourly wage in other activities, but this higher wage represents relatively meager compensation for the significant risk they bear. Prostitution activities are organized very differently across neighborhoods. Where pimps are active, prostitutes appear to do better, with pimps both providing protection and paying efficiency wages. Condoms are used only one-fourth of the time and the price premium for unprotected sex is small. The supply of prostitutes is relatively elastic, as evidenced by the supply response to a 4th of July demand shock. Although technically illegal, punishments are minimal for prostitutes and johns. A prostitute is more likely to have sex with a police officer than to get officially arrested by one. We estimate that there are 4,400 street prostitutes active in Chicago in an average week.
Levitt is the author of Freakanomics and a real connoisseur a salient but quirky economics projects. The ABA Journal story contains this comment by Levitt on his support from the ABF: “A lot of what I do makes the bar foundation very nervous ... [B]ut I have a lot of respect for the foundation because with every project I bring forward—usually loaded with tricky issues about race and class—the bar foundation has been willing to swallow hard and support me, knowing that my results weren’t necessarily going to be very popular.”
If we follow the data, we have a shot at formulating policies that actually work. Kudos to the ABF for supporting this research.