Undercover Economist

Green lights for red-light districts

When men are in transit, and so less likely to be interested in marriage, it should be no surprise that sex takes off in the spot market

The sex workers of Tampa, Florida, and Charlotte, North Carolina, can get ready for a spike in business at the end of next summer: the Republican and Democratic National Conventions, respectively, are coming to town. In the last electoral cycle, the political jamborees were held in Denver and Minneapolis – and there seems to have been a coincidental surge in the local market for sex.

The economists Scott Cunningham and Todd Kendall discovered this by examining advertisements in the “adult services” section on Craigslist, the online ad service. (Craigslist has since closed down this section.)

Using postings in Seattle and Philadelphia as a control group – these cities did not have almost 50,000 visitors descending on them for a few days – the economists estimated that advertisements selling sexual services increased by 29-44 per cent in Minneapolis during the Republican visit and 47-77 per cent in Denver when the Democrats arrived. I’m not going to make jokes about oversexed politicians, largely because the majority of visitors appear to have been journalists.

Perhaps we should not be surprised that when a large number of people drop into town, many of them men, local sex workers see an opportunity to do business. Tourists worry less about being spotted by a neighbour or a colleague. And to the extent that some men may be weighing up the relative attractions of paying for sex versus looking for a wife or girlfriend, being in a city far from home makes looking for a girlfriend relatively less tempting.

It may seem alarmingly cold to view men as weighing up the costs and the benefits of finding a wife versus hiring a prostitute – and just as stark to view women as making the same decision in reverse – but the idea is not mine. Almost a decade ago, two economists, Lena Edlund of Columbia University and Evelyn Korn of the University of Marburg, published an article, “A Theory of Prostitution”, which modelled exactly these decisions. One of their purposes was to explain why sex workers can earn so much money. The abstract begins with a puzzle: “Prostitution is low-skill, labour intensive, female and well paid.” The economists suggested a “marriage market explanation” as the reason why. If marriage can provide women with an important source of income, “it follows that prostitution must pay better than other jobs to compensate for the opportunity cost of forgone marriage market earnings”.

When men are in transit, and so less likely to be interested in marriage, it should be no surprise that sex takes off in the spot market. In their study, Edlund and Korn cited mining camps, military bases, 19th-century American frontier towns and sex industries driven by a surplus of men in African cities. In short, there is nothing special about American political conventions. What might be more surprising is the idea that some women dip into the sex industry very occasionally. In an unpublished paper, Steve Levitt and Sudhir Venkatesh gather data on street prostitutes in Chicago, a different segment of the market from those advertising on Craigslist. Levitt and Venkatesh find that on the Fourth of July holiday demand rose by 60 per cent and prices by 30 per cent. This price increase proved sufficient to tempt some women into sex work for one day of the year.

All this is fascinating from an economic point of view: the market for sex is a market like any other. But some of it is also worrying. Both the mobile buyers of sex and the workers who sell it have long been identified as vectors for sexually transmitted infections. Levitt and Venkatesh find that in the street transactions they analyse, condoms are rarely used. Perhaps those Craigslist advertisements Cunningham and Kendall found were facilitating safer sexual encounters. Let us hope so.

Also published at ft.com.