The Market for Street Prostitutes in Chicago

One of the most intriguing papers in New Orleans this weekend was preliminary work by celebrity economist Steve Levitt of the University of Chicago and sociologist Sudhir Venkatesh of Columbia University.

Venkatesh, who is no stranger to investigations of underground economies, hired former street prostitutes in the south side of Chicago to act as pollsters. The women stood on corners in three neighborhoods (Roseland, Pullman and Washington Park) and collected data from over 100 prostitutes on 2,000 transactions.

The numbers confirm the view that the life of a street prostitute is far from easy. The women were beaten up by their clients once a month on average and the sex acts requested by these clients were often "mind boggling," Levitt said.

"The availability of premarital sex has largely crowded out standard garden variety prostitution," Levitt told the packed room. "What's left is a lot of stuff that the market of wives and girlfriends won't easily provide."

How things have changed. In the 1930-40's, some 50 percent of men lost their virginity to prostitutes, but to have a first sexual experience with a prostitute these days is a rarity.

Using data from the Chicago police department, the researchers showed that prostitution arrests -- mostly the men seeking out sex -- happen in just 0.3 percent of all city blocks, meaning that the market for street prostitution is highly concentrated compared with other types of crime in the city. (The police department in Chicago posts mug shots of those arrested here.)

But we also learn that the police aren't much interested in arresting prostitutes.

"If you're a prostitute in our data, you're more likely to have sex with an off-duty police officer than to be arrested by an off-duty police officer," Levitt said.

In the neighborhood of Pullman, there was only one arrest made during the time Levitt and Venka collected data nearby Roseland had many more. What was the difference between the two neighborhoods? Pullman prostitutes tended to have pimps while Roseland prostitutes flew solo.

Pimps, it turns out, did a good job of directing customers to prostitutes and paid the women better wages. In fact, women in the survey who found out that the researchers had pimp connections asked to be put in touch with the pimps.

Prostitutes in the study worked 11 to 12 hours a week and made between $25- to $35-an-hour compared with an average of $7-an-hour for other types income opportunities. (In contrast, Levitt said a female friend stopped working as a computer scientist and is now a high-priced call girl making well over $100,000 per year.)

Safe sex wasn't on the minds of prostitutes in this "bottom of the barrel" market, Levitt said, as condoms were used in only five percent of all transactions. And about 5 percent of all tricks were freebies given to police officers or gang members.

The supply of prostitutes was also quite fluid.

During warm weather holidays, Washington Park attracts a number of family reunions which had the curious side effect of driving up demand for prostitutes. Still, Levitt and Venkatesh found that the price of tricks didn't rise in response.

As might be expected, prostitutes from other neighborhoods flowed into the area to soak up demand. But more surprisingly, women who didn't typically turn tricks also found the holidays a good time to make some extra money -- it seems that the stigma attached with prostitution is less pronounced in these areas.

The prostitutes in the study also practiced some ethnic price discrimination. If the customer was black (as were all the prostitutes in the study), the women would make the first price quote. But white customers where asked to name the first price in the hopes that the amount would be much higher than the typical transaction. Repeat customers who were black also paid a lot less than average, but that wasn't the case for whites.

Levitt and Venkatesh's full results will be featured in the upcoming sequel to Freakonomics.

(Hat tip to Foreign Policy's Passport blog for the link to the paper. And here is Tyler Cowen's review of Venkatesh's new book Gang Leader for a Day: A Rogue Sociologist Takes to the Streets)

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