The Wages of Sin

Lena Edlund, Joseph Engelberg and Christopher A. Parsons have a new paper on the wages of prostitutes:

Edlund and Korn [2002] (EK) proposed that prostitutes are well paid and that the wage premium reflects foregone marriage market opportunities. However, studies of street prostitution in the U.S. have revealed only modest wages and considerable risks of disease and violence, casting doubt on EK’s premise of an unexplained wage premium. In this paper, we present evidence from high-end prostitution, the so called escort market, a market that is, if not entirely safe, notably safer than street prostitution. Analyzing wage information on more than 40,000 escorts in the U.S. and Canada collected from a web site, we find strong support for EK. First, escorts in the sample earn high wages, on average $280/hour. Second, while looks decline monotonically with age, wages follow a hump-shaped pattern, with a peak in the 26-30 age bracket, which coincides with the most intensive marriage ages for women in the U.S. Third, the age-wage profile is significantly flatter, and prices are lower (5%), despite slightly better escort characteristics, in cities that rank high in terms of conferences, suggesting that servicing men in transit is associated with less stigma. Fourth, this hump in the age-wage profile is absent among escorts for whom the marriage market penalty is lower or absent: escorts who do not provide sex and transsexuals.

The paper also provides some interesting charts. The figure below plots the mean hourly wage by age group among escorts who provide sex to their clients, escorts who do not (e.g. massage only) and escorts who are transsexuals.

The next figure plots the mean hourly wage among escorts who have sex but are located in cities with few conferences. (Conference cities were extracted from the National Business Travel Association’s (NBTA) 2004 survey, “Business and Convention Travelers Report.”)

Is the world getting better or worse?

From NewScientist.com

(Click to enlarge)

The Slums of the Future

From an interesting article on slums and disease:

Not only are today’s slums larger than in the 19th century, but they are more dense. Though they are low-rise structures, the square footage is tiny with a lot of people living in each shack. They are built haphazardly along narrow footpaths, not the broad grids of the inner city. A small fire can spread to destroy 1,000 units of housing in 15-20 minutes. Infectious diseases travel rapidly in such an environment. Slums as contiguous swaths of settlement are largest in Latin America—the largest being on the southeastern edges of Mexico City. There are similar settlement patterns outside Bogota, Colombia, and Lima, Peru. Bombay has the largest slums in South Asia, with about a 500,000 population.

How do we improve this condition? Capitalism. If you believe Capitalism is responsible for this development, I urge you to read Hernando de Soto’s The Mystery of Capital. We touched on de Soto’s ideas here.

Is the anti-nuke movement partly to blame for global warming?

Stephen Dubner and Steven Levitt, co-authors of Freakonomics, argue that the unintended consequences of the anti-nuke movement are partly to blame for global warming.

Read ‘The Jane Fonda Effect’ here.