Monday, January 29, 2007

Porn Makes You Rational

A new paper looking at how testosterone and visual cues affect offers in the ultimatum game can be found here. This article in Nature sums it up:

High-testosterone men fight hardest for a large cut, the researchers found. But the most testosterone-driven men were also the most likely to slacken their cash demands after viewing sexy women. Perhaps they relaxed and began to care less about money. Or perhaps, the researchers suggest, with a 'mate' to impress the men were driven to have some wealth, however modest.

The sight of a potential mate might therefore actually make men more sensible, Van den Bergh says. "Since a few coins is better than no coins at all, men thus become more economically rational after exposure to lingerie or sexy women," he says.
There apparently has also been work which has shown men's rate of time preference changes after seeing "hot" looking women.

Pretty ladies make men want wealth with which to impress, according to a new study - even if they’ll be worse off in the long run.

Psychologists Margo Wilson and Martin Daly at McMaster University in Hamilton, Canada, asked students whether they would prefer, say, $19 tomorrow or $25 next week. They then showed them the faces of ladies whose attractiveness was ranked on the website ‘How Hot Am I?’.

After eyeballing pictures of pretty women, men were more likely to want immediate monetary gratification than to wait for a bigger bonus. Women’s calculations, on the other hand, were unaffected by male eye candy, as were men’s after ogling plainer women or fancy cars1.

Wednesday, January 24, 2007

Wish Me Luck

Despite having what would have been an excellent ASSA session turned down, I've decided to try my hand at organizing another one or two.

Here are the details of the first one:

Session: The Economics of Paid Sex Markets JEL: J4

Session Organizer: Taggert J. Brooks University of Wisconsin – La Crosse

Chair: Alan Krueger Princeton University

Paper 1:
"An Empirical Analysis of Street Prostitutes." Steve Levitt , University of Chicago and Sudhir Venkatesh, Columbia University


We collect transaction-level data on over 50 street prostitutes over the course of an 18 month period. We document that prostitutes working in the same area earn very different wages and these wage differentials can be partially explained by observable characteristics.
Considering the risks borne by the prostitutes, they are not particularly well compensated. The prostitutes engage in price discrimination across customers. We also explore the role of pimps.

Discussant: Lena Edlund

Paper 2:
"Enforcing Licensing Requirements: Implications for Disease Transmission in the Sex Market" Manisha Shah, University of Melbourne, and Paul Gertler University of California – Berkley and NBER


Several countries are pursuing the regulation of commercial sex work in order to decrease the spread of sexually transmitted infections (STIs) and reduce the probability of a generalized HIV/AIDS epidemic. In many Latin American countries, the commercial sex market is characterized by two sectors, brothel and street, where the latter is marked by riskier behavior (e.g., lower rates of condom use) and higher prevalence of STIs. This paper studies the public health effects of enforcing licensing requirements in a two-sector commercial sex market, where enforcement varies between sectors. Specifically, we use nationally representative data from Ecuador to examine the effect of enforcement in brothels vs. enforcement in the street on overall STI prevalence. We exploit regional variation in the frequency of police visits to verify sex workers are complying with licensing requirements. The major finding of this paper is that increasing police presence in the street sector is most effective in decreasing disease. We find that increasing enforcement by one police visit per month in the street significantly decreases STIs by 8 percent. The second major finding is that increasing enforcement by one police visit per month in the brothel sector has no significant effect on disease outcomes. We propose a partial equilibrium model which is an extension of our previous model in Gertler, Shah, and Bertozzi (2005) to explain these findings.

The model predicts that the cost of enforcement increases the price of commercial sex. As the price of sex increases, demand decreases and the overall number of clients decreases. The effect of enforcement on disease works through the increase in prices, as fewer clients implies less disease. In addition to the price effect, increased enforcement decreases the returns of one sector relative to another. For example, increased street enforcement encourages street sex workers into the less risky brothel sector, improving overall public health. However, increased brothel enforcement could encourage non-compliant brothel sex workers into the street sector, exacerbating public health problems.

We test the predictions of the model and find that an additional police visit in the street increases the price of non-condom sex by ten percent and decreases the number of clients. In addition, sex workers are significantly less likely to join the street sector for an increase in street enforcement. These results explain the 8 percent decrease in overall disease for a given increase in street enforcement. In the unlicensed brothel sector, however, prices do not significantly increase with enforcement. In addition, simulations show that non-compliant sex workers who leave the brothel sector switch to the street sector, resulting in potentially worse public health outcomes. The findings of this paper indicate that the efficacy of regulation does not result from stricter enforcement in the brothel sector but rather from clamping down on the street sector. To minimize perverse effects of regulation, enforcement should account for the underlying characteristics of the sex market and be concentrated in the sector which is marked by lower condom use and higher STI prevalence.

Discussant: Emily Oster, University of Chicago

Paper 3:
“In Da Club: An Econometric Analysis of Strip Club Patrons” Taggert J. Brooks, University of Wisconsin – La Crosse


Conservative estimates from the National Health and Social Life Survey
(NHSLS) suggest 17 million Americans went to a club that featured nude or semi-nude dancers in 1991. Their attendance comprises nearly 67 million visits, 10 million more than the attendance at major league baseball games that year. With reported total revenues earned by strip clubs at 15 billion dollars a year (Smyth, 2005; Thompson, et. al., 2003), the industry arrived at this point following a doubling of the number of strip clubs between 1987 and 1992 according to Hanna (2005). In this paper I estimate a hurdle model using the NHSLS to test two popular theories which purport to explain the rapid increase in the number of clubs. I find that for those who reported changing their behavior in response to AIDS/HIV they were much more likely to go to a strip club and more frequent visitors than those who did not change their behavior. On the second explanation I fail to find support for the belief that attendance at strip clubs was motivated by the desire to escape the uncertain rules of a gender integrated work place. The rise of societal sensitivities to sexual harassment in the workplace does not appear to explain patron attendance at a strip club.

Discussant: Scott Drewianka, University of Wisconsin - Milwaukee

Paper 4:
“From Sex to Gender”, Lena Edlund , Columbia University and Evelyn Korn Philipps-Universit at Marburg.


Humans are gonochoric, i.e., the male and female reproduction functions are in separate individuals. Here, we consider the alternative, hermaphroditism. A study of the pros and cons of hermaphroditism yields insights into gender roles as we know them.

Specifically, we find that: (i) female chastity is the preserve of gonochorism; (ii) secondary sexual differentiation, e.g., dimorphism, is a precondition for the existence of pure males; and (iii) only among gonochorsts could intra-male violence, a form of secondary sexual differentiation, be selected for.

Discussant: Ted Bergstrom, University of California Santa Barbara

Sunday, January 21, 2007

The Curse of No Winners

Auction theory in economics suggests sometimes the winning bidder pays too much. They call the phenomenon The Winners Curse. Kind of like the LA Galaxy's recent acquisition of Becks.

In DC a "rare" license for a strip club went up for auction. There has been a moratorium on issuing new licenses for sometime (something which in fact is not legal, as we saw in Seattle).

But the $2 million minimum was too high, he decided, and neither he nor anyone else made a bid. Bidders also passed on two dance cages, complete with hydraulic-lift stages, that were going for $5,000 each. The auctioneer had more luck with the two 13-foot dance poles, which quickly went for $50 to Daniel Clark of Severn.

The license was being sold by club owner Ron Hunt, and as one of only 20 such licenses in the city, which has a moratorium on issuing additional licenses, it was considered a valuable asset.

"You're buying an asset that essentially can't be moved because there's so many approval hurdles to open a gentleman's club," Shulman said. "The city has been so developed with high-end real estate. People spend millions for a house, they don't want a gentleman's club next to it. There's no guarantee you could do it."

While the license allows an owner to open a club with nude dancing anywhere in the city that has commercial zoning, a club must sit at least 600 feet away from any schools, community centers and housing. Community members can protest the opening of such a club, and it must get approval from the District's Alcoholic Beverage Control Board

They want 2 million dollars? I'm pretty sure it would be cheaper to sue the city to end the moratorium. Besides, this site is one of the few remaining places that qualify under the zoning requirements. Which -by the way- are also illegal if they rule out every location within the municipality.

Catching Up

To say my posts have been sporadic would be kind. Non-existent would be a more appropriate characterization. So my plan as I get ready to transition into sabbatical starting in May is to post more frequently. Since I've recently implemented David Allen's Getting Things Done, one of the ways I will achieve this is to start knocking off my posts in draft. That means some of them may refer to rather dated news articles. I will try and note when they happened, but I will always make sure I connect their relevance to my research in some way.

So here is to more writing and blogging in 2007.