Superfreakonomics_ global cooling, patri - Steven D. Levitt [16]
Why isn’t the busiest night also the most profitable? Because the single greatest determinant of a prostitute’s price is the specific trick she is hired to perform. And for whatever reason, Saturday customers purchase more expensive services. Consider the four different sexual acts these prostitutes routinely performed, each with its own price tag:
It’s interesting to note that the price of oral sex has plummeted over time relative to “regular” sexual intercourse. In the days of the Everleigh Club, men paid double or triple for oral sex; now it costs less than half the price of intercourse. Why?
True, oral sex imposes a lower cost on the prostitute because it eliminates the possibility of pregnancy and lessens the risk of sexually transmitted disease. (It also offers what one public-health scholar calls “ease of exit,” whereby a prostitute can hurriedly escape the police or a threatening customer.) But oral sex always had those benefits. What accounted for the price difference in the old days?
The best answer is that oral sex carried a sort of taboo tax. At the time, it was considered a form of perversion, especially by religious-minded folks, since it satisfied the lust requirements of sex without fulfilling the reproductive requirements. The Everleigh Club was of course happy to profit from this taboo. Indeed, the club’s physician avidly endorsed oral sex because it meant higher profits for the establishment and less wear and tear on the butterflies.
But as social attitudes changed, the price fell to reflect the new reality. This shift in preferences has not been confined to prostitution. Among U.S. teenagers, oral sex is on the rise while sexual intercourse and pregnancy have fallen. Some might call it coincidence (or worse), but we call it economics at work.
The lower price for oral sex among prostitutes has been met by strong demand. Here is a breakdown of the market share of each sex act performed by the Chicago prostitutes:
Included in the “other” category are nude dancing, “just talk” (an extremely rare event, observed only a handful of times over more than two thousand transactions), and a variety of acts that are the complete opposite of “just talk,” so far out of bounds that they would tax the imagination of even the most creative reader. If nothing else, such acts suggest a prime reason that a prostitution market still thrives despite the availability of free sex: men hire prostitutes to do things a girlfriend or wife would never be willing to do. (It should also be said, however, that some of the most deviant acts in our sample actually include family members, with every conceivable combination of gender and generation.)
Prostitutes do not charge all customers the same price. Black customers, for instance, pay on average about $9 less per trick than white customers, while Hispanic customers are in the middle. Economists have a name for the practice of charging different prices for the same product: price discrimination.
In the business world, it isn’t always possible to price-discriminate. At least two conditions must be met:
Some customers must have clearly identifiable traits that place them in the willing-to-pay-more category. (As identifiable traits go, black or white skin is a pretty good one.)The seller must be able to prevent resale of the product, thereby destroying any arbitrage opportunities. (In the case of prostitution, resale is pretty much impossible.)
If these circumstances can be met, most firms will profit from price discriminating whenever they can. Business travelers know this all too well, because they routinely pay three times more for a last-minute airline ticket than the vacationer in the next seat. Women who pay for a salon haircut know it too, since they pay twice as much as men for what is pretty much the same haircut. Or consider the online health-care catalog Dr. Leonard’s, which sells a Barber Magic hair