Sunday, November 22, 2009

Steven Levitt on Hookers and Pimps

I have been highly critical of most of the writing of Steven Levitt.

However, I have come across a chapter in the new Steven Levitt/Stephen Dubner book, Superfreakonomics, where I am pleased to report that they actually provide some insightful data. It's obvious they have done some significant research on hookers and pimps.

In the book, they report that their investigations, mostly on the south side of Chicago, indicate that pimps provide a valuable service to hookers. It should be pointed out that Walter Block in his book, Defending the Undefendable, made the theoretical case for pimps providing valuable services to hookers. It's always fascinating though when a free market is viewed in action versus what a theoretical view of such action might be like. Inevitably, the real free market ends up delivering more services than can be envisioned from a simply theoretical understanding that a free market will provide important services.

Levitt and Dubner tell us that when hookers use pimps they earn more money per hour, than when they don't use them, and that they work fewer hours. Pimps are able to go in to clubs and solicit clientele where a hooker might not be allowed.

Further, Levitt and Dubner point out that the pimps stop gang members from forcing the hookers to provide the members "freebies".

Another fascinating Levitt and Dubner point informs on the different price information strategies hookers use for black men versus whit men. Levitt and Dubner report that with black men, hookers will state the price for their services, with white men, hookers demand that the white men tell them how much they want to pay.

Levitt and Dubner theorize that because the south side of Chicago is black (This is where Michelle Obama is from) that the black customers are local and already know the price structure so there is no point in haggling, while white men are not from the area and are not familiar with the price structure, thus they ask them how much they are willing to pay in the hope of getting a higher pay.

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