Superfreakonomics_ global cooling, patri - Steven D. Levitt [25]
When she started out in Chicago, at $300 an hour, the demand was nearly overwhelming. She took on as many clients as she could physically accommodate, working roughly thirty hours a week. She kept that up for a while, but once she paid off her car and built up some cash reserves, she scaled back to fifteen hours a week.
Even so, she began to wonder if one hour of her time was more valuable to her than another $300. As it was, a fifteen-hour workload generated more than $200,000 a year in cash.
Eventually she raised her fee to $350 an hour. She expected demand to fall, but it didn’t. So a few months later, she raised it to $400. Again, there was no discernible drop-off in demand. Allie was a bit peeved with herself. Plainly she had been charging too little the whole time. But at least she was able to strategically exploit her fee change by engaging in a little price discrimination. She grandfathered in her favorite clients at the old rate but told her less-favorite clients that an hour now cost $400—and if they balked, she had a handy excuse to cut them loose. There were always more where they came from.
It wasn’t long before she raised her fee again, to $450 an hour, and a few months later to $500. In the space of a couple of years, Allie had increased her price by 67 percent, and yet she saw practically no decrease in demand.
Her price hikes revealed another surprise: the more she charged, the less actual sex she was having. At $300 an hour, she had a string of one-hour appointments with each man wanting to get in as much action as he could. But charging $500 an hour, she was often wined and dined—“a four-hour dinner date that ends with a twenty-minute sexual encounter,” she says, “even though I was the same girl, dressed the same, and had the same conversations as when I charged $300.”
She figured she may have just been profiting from a strong economy. This was during 2006 and 2007, which were go-go years for many of the bankers, lawyers, and real-estate developers she saw. But Allie had found that most people who bought her services were, in the language of economics, price insensitive. Demand for sex seemed relatively uncoupled from the broader economy.
Our best estimate is that there are fewer than one thousand prostitutes like Allie in Chicago, either working solo or for an escort service. Street prostitutes like LaSheena might have the worst job in America. But for elite prostitutes like Allie, the circumstances are completely different: high wages, flexible hours, and relatively little risk of violence or arrest. So the real puzzle isn’t why someone like Allie becomes a prostitute, but rather why more women don’t choose this career.
Certainly, prostitution isn’t for every woman. You have to like sex enough, and be willing to make some sacrifices, like not having a husband (unless he is very understanding, or very greedy). Still, these negatives just might not seem that important when the wage is $500 an hour. Indeed, when Allie confided to one longtime friend that she had become a prostitute and described her new life, it was only a few weeks before the friend joined Allie in the business.
Allie has never had any trouble with the police, and doesn’t expect to. The truth is that she would be distraught if prostitution were legalized, because her stratospherically high wage stems from the fact that the service she provides cannot be gotten legally.
Allie had mastered her domain. She was a shrewd entrepreneur who kept her overhead low, maintained quality control, learned to price-discriminate, and understood well the market forces of supply and demand. She also enjoyed her work.
But all that said, Allie began looking for an exit strategy. She was in her early thirties by now and, while still attractive, she understood that her commodity was perishable. She felt sorry for older prostitutes