Tuesday, October 2, 2007

Why aren't prostitutes paid like stadium vendors?

Tonight I watched a documentary called American Pimp. It was fairly interesting although it was difficult to watch the pimps talk so easily about manipulating women. I think I was made most uncomfortable by the fact that I sometimes felt that they were kind of charming. (That was an awkward sentence. Unintentional symbolism? Yup, that's it.)

Anyways, the most interesting thing I learned was the percentage that prostitutes get of their revenue. Zilch. (I'm not sure how exactly they're paid but that much was clear.) This seems like a bad business plan since it gives little incentive to the women to generate additional revenue. That is, in theory the pimps could make more money by giving the prostitutes a cut so that they work harder. Stadium vendors, for example, get paid based on how much they sell. What is different about prostitution so that this business model doesn't apply?

Perhaps the answer is that it's not different and the industry is due for a shake-up from an economics savvy pimp. But street prostitution has been around so long that I doubt a flawed strategy has persisted. Especially when the alternative is so obvious. Thus, I do think it's correct to ask why the commision-based model doesn't apply.

I'm tempted to relate the situation to the one described by Levitt and Venkatesh of crack dealers working for peanuts in hopes that they can work their way up the organization. But there is no up for these women. Or perhaps "up" is an occasional night out with their pimp. (Okay, I'm getting more depressed now.)

Alternatively, pimps may not need to offer a carrot (percentage of revenue) if their sticks (psychological and physical punishment) are effective enough to get their prostitutes to work as hard as they can. I think this is more likely the case. The pimps can easily monitor their prostitutes effort and punish them if they don't seem to be working hard. Both the cost of monitoring and the cost of punishing are probably low. Monitoring is cheap since the pimps don't have much else to do and the cost of punishing is cheap since the women lack other options. (Well, they could go to another pimp but I wouldn't rule out oligopoly behavior amongst the pimps as far as this is concerned.)

Turning the question around, why aren't stadium vendors paid like prostitutes? I think it's likely that monitoring and punishment are relatively expensive. (And, obviously, punishment is limited.) So, anyone have the data to test this hypothesis? (Perhaps a better question is: what data would you need to test this hypothesis?)

9 comments:

SL said...

Despite the obviously awkward subject, you raise a very good question. Are you sure the prostitutes aren't paid in-kind in some way? Drugs come to mind. I'm with you about the low cost of monitoring and punishment, but you have to get the prostitute into the biz in the first place, right? I'm guessing they don't readily offer to whore for free to strangers.

Anonymous said...

Jason...this is a very indirect way of asking Jenice for a raise.

Jason said...

Sarah, based on the documentary, that is likely the case. One woman talked about her pimp paying her rent and whatnot. Also bail when necessary. So they definitely are compensated but it seems to be in the sense that "they are taken care of."

And Matthew, my direct methods have only been met with the the reply that "pimpin' ain't easy."

Will said...

Economically, what's the difference between a carrot and a stick?

I think the answer to your question also answers the question about why minimum wage laws don't seem to result in unemployment. Just because its hard for us to measure non-cash payments doesn't mean they're not economically important.

I guess you, or your friendly neighborhood sociologist, could follow prostitutes around and count how many tricks each pull and how many each gets beat up by their pimp.

Jason said...

What does "economically" mean anyways?

Also, I agree that it's likely that the prostitutes are rewarded in some way when they bring in a lot of money. That said, I would guess these rewards are small.

And I'm definitely not cut out for following prostitutes or pimps. Maybe someone can introduce me to a friendly neighborhood sociologist with an in?

Will said...

Well, I don't know what "economically" means, but it certainly wouldn't be the arbitrary distinction between what we can and can't measure.

http://www.blackwell-synergy.com/doi/abs/10.1111/1467-9566.ep11434434
http://www.ingentaconnect.com/content/routledg/curs/2004/00000041/00000009/art00005
http://www.leeds.ac.uk/sociology/people/ts.htm and her book:
http://www.willanpublishing.co.uk/cgi-bin/indexer?product=1843920824

Jason said...

Nice finds.

Anonymous said...

Jason, student journalist here writing a piece on ballpark vendors. Wanted to ask you a few questions about the pimp parallels. First, where have you seen vendors in action--which arenas, how old were they, what were they hawking, what was their demeanor, etc.? Second, who do you think ultimately works harder--prostitutes or vendors hauling 50-pound beverage carts in July? You can get back to me by replying to this post or sending me an e-mail at T_ravis2003@hotmail.com. If you have the time to asnwer my questions, I'd really appreciate it. If not, no worries. I plan to return to your blog often--very entertaining stuff.

Best, Travis

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