The Economics of Prostitution


The oldest profession in the world, is still based on the basic economics of demand and supply. Women are commodified and treated as objects that can be easily purchased and sold. Prostitution, even though a gross violation of human rights, has a huge turnover. Since prostitution is illegal in India, little data is available regarding the size of this industry. Studies conducted in Chicago and other parts of United States, where prostitution is legalized,showed that even though prostitution can be a lucrative business, the sex workers themselves do not earn much. Additionally they are more susceptible to sexual violence, sexually transmitted diseases and gendered violence too.

Prostitution is seen as a way out from bad economic and familial circumstances. Most of the pimps and prostitutes grew up in families where sex work was normalized. Also, most of the prostitutes get stuck in the vicious circle of poverty because of limited educational and occupational opportunities and the stigma attached to prostitution. In a study, about half of the prostitutes and pimps interviewed cited encouragement from the family and poverty as the major reason for joining this industry. Even though today sex is seen in a more liberal light, it is still very much a taboo, especially in collectivistic cultures like India. Prostitutes are ostracized from the society and have no access to social or economic security.

This limits prostitutes’ ability to break out of this cycle.

Prostitution is seen as a low skill but high paying profession. But both prostitution as well as pimping aren’t exactly profitable. With the advent of social media and the hookup culture, where meeting another person just for sex is alright, there seems to be a decline in the demand for sex workers. Yet, the demand for prostitutes would never go away completely. Today, prostitution doesn’t just work in the assigned red light areas but pimps have started using social media to get clients. Sex work now happens in five star hotels and fancy lodges. Prostitution today isn’t just about the street work with red light areas but is sophisticated and hidden. This transformation from the streets to the internet makes it even harder to monitor and gain data regarding this enormous industry. Prostitutes and their clients do not exchange any receipts. Pimps and prostitutes do not pay taxes on their earnings, making it difficult for law enforcement to follow through.

In a recent study, “An Empirical Analysis of Street-Level Prostitution,” University of Chicago professor Steven D. Levitt and Sudhir Alladi Venkatesh of Columbia University , there are numerous findings that can be applicable to the Indian scenario too. For instance, sexual acts were at times given as “freebies” to police officers to avoid arrests. Fridays were the busiest days and Mondays were the slowest. During times where the demand was high, there was a hike in prices and the customers had to shell out more at seasonal spikes. Unprotected sex cost more and condoms were used in 25% or fewer acts. If women had a pimp, they had to part with 25% of their earnings as the pimp’s cut.

Theory of Prostitution” is a paper written by economists Lena Edlund and Evelyn Korn that was published in the Journal of Political Economy. According to this paper, wives and whores can be considered as economic goods that can be bought by a man. So basically, a man can make a choice between a wife or a whore, thus incurring an opportunity cost. Mate selection is a market, with reproductive sex as basis for marriage. Whenever a person wants to enter the cost-benefit analysis of being part of that relationship. According to the paper, wives are superior to whores from the point of view of reproductive sex, because their consumption increases with an increase in income. This is explains why prostitution is less common in wealthier countries. Yet, this brings into question on why prostitution is still prevalent and why sex workers are looked at as substitutes for wives. From an evolutionary perspective, women tend to look for partners that are higher in economic and social status. Thus, for women is an important source of income. In this way, prostitution must pay better than other jobs to compensate for this trade off that these women are subjected to.

The major bone of contention of all this economic theories of prostitution is that it simplifies a paid sexual act as a mere economic transaction. It compartmentalizes prostitution as another act of labour.

In a bid to understand this vast industry of prostitution, it tries to tackle this complicated and complex problem just by looking at numbers. The simplification of this deeply embedded misogynist institution that is facilitated by a patriarchal society, trivializes this unjust and oppressive system. Sex trafficking, another arm to supply “women” to the ever increasing demand. The economic theories, in a way, view women as commodities that can exchanged, bought and sold.

They completely ignore the social situations that these women are part of or the experiences that they are going through.

Numbers are a flawed way of understanding this age old industry as it dehumanizes the sexist experience that these women go through on a daily basis.

Yet, there is a silver lining to all this data and numbers. Numbers are a good predictor to various social phenomenon and the size of this industry. The economics of prostitution can help frame better policies to help women escape from this institutionalized sex trade. Legalizing prostitution doesn’t necessarily help, since it doesn’t tackle the deeply rooted problem of looking sex as a service and women as the service providers. Therefore, these numbers and data are important, not as a solution to the problem but as a starting point for better state policies to deal with prostitution as an institutionalized sex trade.

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