Tuesday, July 12, 2005

The Market for Unprotected Sex

The June issue of Journal of Political Economy has an interesting article by Gertler, Shah and Bertozzi entitled Risky Business: The Market for Unprotected Commercial Sex.

The Abstract:
While condoms are an effective defense against the transmission of HIV, large numbers of sex workers are not using them. We argue that some sex workers are willing to take the risk because clients are willing to pay more to avoid using condoms. Using data from Mexico, we estimate that sex workers received a 23 percent premium for unprotected sex. The premium represents a value of one life year of between $14,760 and $51,832 or one to five times annual earnings. The premium jumped to 46 percent if the sex worker was considered very attractive, a measure of bargaining power.
The implied value-of-life estimates are based on wage differentials - the extra money prostitutes require to take the risk of unprotected sex. They are essentially trading off between money and their life expenctancy. This, to an economist at least, reveals how they value their own life.

The upshot of all this is that programmes to make condoms more available are unlikely to be as effective in reducing the spread of HIV as educating both sex workers and clients as to the risks of unprotected sex.

Interestingly, in some situations the client will want to use protection while the sex worker doesn't (presumably for reasons of comfort). In such cases the sex worker will actually offer the client a discount of twenty percent to forgo condom use.

It would be interesting to see the similar research in a region with a higher HIV rate (i.e. Africa) and a region where people seem to be more risk averse (i.e. the US). My guess would be that in Africa the higher risk of infection would be at least partly offset by the lower opportunity cost of sex work. Women in most of Africa simply don't have that many options and so would rationally take full advantage of every opportunity to make money, so we may not see a much higher premium for unprotected sex. Of course there are many variables to consider, so that is really little more than a stab in the dark.

The article makes a lot of intuitive sense and the methodology seems pretty solid. Thankfully, the mathematics is kept to a minimum with only a bit of statistical regression. Have a look at it next time you're at a place of Higher Learning.
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