THE ECONOMICS OF HIGH-END PROSTITUTES

SUPPLY AND DEMAND | April 10th 2008

mistress_f/Flickr

What skills can earn a woman $5,500 an hour? Still reeling from Eliot Spitzer's surprise bouts of discretionary spending, Allison Schrager examines the supply and demand of high-end call girls ...

Special to MORE INTELLIGENT LIFE

Among the many things we are left to consider in the wake of the Eliot Spitzer scandal, there is one I still can't quite get over: the staggering price of a high-end call girl. What service can anyone provide to justify up to $5,500 an hour?

Although sex is a unique commodity, it must still obey market principles of supply and demand. In a post last year on Free Exchange, The Economist's economics blog, I wrote about how the prostitution market is exceptionally sensitive to large fluctuations in wealth and expectations, and so it might be considered a lagging indicator. I mentioned that while most people consider it an extremely undesirable job, on the high end "it can be quite lucrative and requires few skills (though a fair helping of unequally distributed natural endowments)."

"Inferior skills?", commented someone under the name "spairme". "Obviously, you have not visited one...To be able to command premium pricing an [sic] any market, a service must be superior."

Both spairme and Spitzer left me curious to learn more about the economics of the world's oldest profession.

The demand side:

What explains the enormous income gap between high-end prostitutes and ordinary streetwalkers or even typical working women? I decided to conduct a rather unscientific survey of potential consumers in an airport executive lounge. In conversations with several men--a professional athlete and several business executives--I asked why it was more attractive to pay a premium than to solicit a woman on 11th Avenue, say. They all responded with groans and wincing. "That is just sick and sleazy," one man said, nearly shivering with disgust. "You could end up bringing home all sorts of diseases to your wife and it could be dangerous." Everyone hastened to clarify that these answers were based on hunches, not experience.

It seems purchasing sex is like buying shellfish: it should come from a reputable provider. Meeting a woman in a clean, well-kept environment signals higher quality and lowers the risk of an infection substantially.

Some argue that such no-strings transactions are ultimately less harmful to both career and marriage than taking a mistress. The men at the airport lounge also pointed out that the premium buys discretion. But at these prices, it is difficult to avoid a paper trail. Spitzer spent more than $80,000 on high-end prostitutes in one year. That's a lot of bank withdrawals.

On the website of the service Mr Spitzer patronised (which has since been disabled), escorts were ranked with twinkly diamond ratings; higher rankings demanded a higher price. Given that the women all looked equally beautiful and delivered similar promises, I couldn't help but wonder what gave them their value. A colleague with some experience arranging escorts for clients (when he worked at a rather nefarious-sounding private-equity firm) explained that a higher price often meant that a woman was either especially talented and versatile (ie, would provide a wider range of services), or simply more popular and experienced. I had been under the impression that this was a job in which seniority was undesirable. It depends on the woman, he said, just before emphatically denying ever using a call girl himself.

As with all things, a premium price signals quality. Men who seek out high-end prostitutes may question the value of a bargain. The industry feeds their narcissism (hence the name "Emperors club VIP"), and part of the fantasy is feeling special enough to purchase that multi-diamond woman.

The supply side:

The most obvious reason why high-end prostitutes can charge so much is that they are doing something illegal. Being arrested for prostitution will certainly hinder future earnings prospects in other industries (unless one manages to write a juicy tell-all about the experience; still, how many such books can the market support?). A premium fee is justified by the risks involved in working in an illegal industry, as well as the related stigma of being paid for sex.

In the paper  "A Theory of Prostitution", published in 2006 in the Journal of Political Economy, economists Lena Edlund and Evelyn Korn suggest there is a marriage market explanation behind why prostitutes are so well-paid:

[A] woman cannot be both a prostitute and a wife. Combine this with the fact that marriage can be an important source of income for women, and it follows that prostitution must pay better than other jobs to compensate for the opportunity cost of forgone marriage market earnings.

According to the Emperor's Club (defunct) website, the women they provide not only possess exceptional beauty, but also intelligence and sophistication. Some, the company went on to say, are successful professionals in other high-profile industries. Though this last claim seems dubious, the women must be exceptionally attractive and sufficiently intelligent to hold a customer's attention. Unlike their low-end counterparts, high-end call girls are expected to supply some level of companionship, and often accompany clients to dinners or parties. Because a beautiful and intelligent woman inevitably has other job (and marriage) options, a very high wage is necessary to encourage them to forgo other opportunities, and risk arrest, disease and shame.

While $5,500 and hour may sound high, not all of that goes to the woman. A substantial amount goes to the escort service itself. And escorts must spend a great deal maintaining their value without immediate compensation. Much time and money is spent on grooming: hair removal, expensive hair-cuts (one stylist I spoke to claims several of his clients are escorts, who spend at least $1,000 a month on extensions and colour) and regular exercise. Many women have had plastic surgery (particularly if they were once men) and maintain an expensive designer wardrobe. Frequent visits to the doctor are necessary to protect against sexually-transmitted diseases.

Ultimately, the decision to become a high-end prostitute is often not only an economic one, but is determined by a woman's attitude toward sex. For many women no amount of money would ever entice them into prostitution. You cannot deconstruct the economics of selling sex without acknowledging that, sadly, many women who enter the trade, even at the high end, have at some point in their lives been victims of abuse. Economic reasoning has little sway over how a woman values her body.

The market for sex ultimately determines a price like any other industry. Sex was one of the first goods ever traded. It commanded a price even before the days of shell companies, complex money-laundering schemes and diamond rankings. I look back on my post from a year ago and recognise my ignorance: high-end prostitutes do have a unique skill-set.

As spairme noted:

An unskilled and unenthusiastic provider (ie, acting skills) is not going to last long..... It's not just about being born beautiful and laying there like a beached starfish!

(Allison Schrager is an economist based in New York.)

ISSUES & IDEAS  

Comments

Re: prostitutes can't be wives


well... not necessarily. There was a high-priced prostitution ring in the Hermosa/Redondo/Manhattan beach area of LA that was busted a few years back, most of the women were suburban housewives.

Legality of prostitution


The most obvious reason why high-end prostitutes can charge so much is that they are doing something illegal.

There are high-end prostitutes commanding that kind of money in places where prostitution is legal, such as Australia and the UK. So that argument falls flat.

How does one protect against


How does one protect against sexually-transmitted diseases by going to the doctor frequently? By buying condoms from your doctor?

My wife and I are both


My wife and I are both prostitutes. We work separately and neither of us brings home less than $3K CDN from a 4 hour engagement. Weekend engagements earn $10K. There are 3 reasons we are able to command the price we do.

1) We are educated and well read. Pick a topic and we will engage you in an interesting, entertaining discussion. We know the world and people. We see that the world is a very screwed up place populated by very frustrated people who experience little real joy and often have nobody to talk to. We just talk to them. No cliche, no pretentiousness, just honesty. For that they like us. Like us a lot. Once the heart is warm the libido is open to ultimate satisfaction. If you can't make the client feel warm and fuzzy you're doomed to street walking and $100 quickies.

2) We are the best f*cks most people will ever have. We are that because we took the time to study the arts of arousal, stimulation, maintenance of the high and multiple orgasm. People are not born with that talent and 99.99% never learn it. Yet we all yearn for more than our partners or a $100 McLay can give. Hint: study Arabic arts and traditions, don't waste too much time on the Oriental.

3) We do anything the client wants except eat feces and receive severe pain. Usually, we end up doing what we want and the client simply goes along with it and asks for more of the same.

We were not always prostitutes and neither of us has ever been abused. If we had been abused I don't think we could be the professionals we are. We decided to go into the business after we realised that we were the best either of us had ever experienced and that others might be willing to pay dearly to experience what we studied hard to learn.

While the article has some


While the article has some good points, the pejorative nature of the language is indicative of a society in denial about its sexuality and sex in general.

I am a high end gay male escort and I can tell you, the market does not dictate the price of high end escorts, their performance does. high end escorts can charge that amount of money because they offer their clients far more than just sex. The best escorts can demonstrate genuine emotions for their clients, even if only for the time they are together. They can make their clients feel loved. Given the importance of human intimacy to everyone, I for one think escorting is a highly honorable profession.

I am not naive enough to think that society shares my beliefs, i just dont care. In most articles, TV shows and movies, "prostitutes" are depicted only slightly above kiddie diddlers, save one show called FireFly. In that show the "companion" is well regarded and in fact, licensed by the government. she is asked how she chooses her clients and how she can be with someone that is "ugly" and her answer is beautiful. She said she does not choose clients based on how they look, she chooses them based on if they have good energy and are kind people. So do I and I suspect the $5k escorts do too.

I find it amusing that articles such as these always focus on issues such as diseases one can catch and such. I expect that any college jock is likely to be at more risk than a high end escort. There is also a misconception that only "ugly" people have to pay for sex. What narrow minded thinking. I don't have to pay for sex but sometimes I do because I want what i want when i want it.

Its time for society to grow out of it's sexual infancy and see sex for what it is, a beautiful gift that two consenting adults can share, whether money transfers hands or not.

Being an escort has made me a better person. I have learned to be attracted to people more for what they are like on the inside rather than merely their looks.

Are there problems with the industry? Of course! But that is because society is in denial, treats sex workers poorly (in public anyway) and consequently the industry is full of nefarious people who do not have the escort's best interests in mind. If society could get over itself and legalize and regulate the industry, that would not be the case.

In the meantime, I will continue to learn and grow and celebrate sexuality.

Oops! Their provincialism is showing.


"[A] woman cannot be both a prostitute and a wife."

My. What a sheltered life they lead. Let alone, you'd think even economists would be objective enough to realize that human relations are sufficiently diverse that one can't generalize that readily. (I'm reminded of Kinsey saying as much about the wasps he studied before he turned to human sexuality.)

Or, perhaps this passage from Shaw's "Caesar and Cleopatra" goes to the point:

BRITANNUS (shocked).

Caesar: this is not proper.

THEODOTUS (outraged).

How!

CAESAR (recovering his self-possession).

Pardon him. Theodotus: he is a barbarian, and thinks that the customs of his tribe and island are the laws of nature.

Re: Prostitutes cannot be housewives


"There was a high-priced prostitution ring in the Hermosa/Redondo/Manhattan beach area of LA that was busted a few years back, most of the women were suburban housewives."




Duncan, I think you are missing the point. Prostitutes cannot be "housewives" in the sense that they will never be in a committed, monogamous relationship with a husband as long as they are engaging in sex outside that marriage for money.

Narrowness


And, Amy, I think you are perhaps missing the point.

When you say, "...they will never be in a committed, monogamous relationship with a husband as long as they are engaging in sex outside that marriage for money," my guess is one could probably strike those last two words, and you'd still agree. That's a very common concept of marriage. But it's not the only one.

Yes, but they were other


Yes, but they were other people's wives!

I'm not sure thats the point either.


What is being referred to is the common and largely accepted definition of marriage while it does not explicitly imply monogamy does carry the idea of monogamy as part of its legal contract, otherwise there would be no legal grounds for divorce because of infidelities.

But that's not even the point either. The root of the matter seems to be that if we cannot agree upon an understanding of a word, then our entire language is fruitless as communication would lead way to constant ambiguity. (Well what KIND of marriage do you refer to? as well as other infinite questions we must then ask simply because there is one example of the contrary)

The mere existence of non-monogamous marriages does not debunk the general intended meaning of the term.

And great googly moogly....


... since when do we consider husbands not husbands, when they stray or use the services of prostitutes?

I know we consider some double standards hardwired in our culture, but jeezum crow, how blinkered can one be?

Need I even say that loving husbands and wives prostitute themselves, if their kids need food on the table, and how they see each other as husbands and wives is more important than how we fit them into a traditional fidelity box?

If we had honesty, rather than pretensions to monogamy and "commitment", we'd have fewer people infected with sexually-transmitted diseases, fewer scandals regarding tainted blood donations, and a bit more compassion about how adults really live.

Not harshing on the author; rather desperately wishing for an unpacking of the assumptions we're making about sex work, sex workers, the lives of couples, and commerce.

Live!


You seem to have achieved what few others have: intersection of your following your dreams and following your heart. Just wanted to drop by and note my admiration for doing what you feel rather than what you are told. My best wishes -

Thank you!


While the article has some good points, the pejorative nature of the language is indicative of a society in denial about its sexuality and sex in general.

THIS was what was bothering me about the article - the writing's very patronizing. Thank you for putting it so succinctly into words.

the point?


I thought the point was the economic advantage of marriage, not the monogamy. If a woman can secure income from a husband AND income from prostitution, this reduces the "cost" to a woman of prostitution.

I think both the article and


I think both the article and the commentators are sliding around the fundamental issue, here. Huge prices can be paid for sex because huge, basic feelings are involved. Those capable of paying such huge prices usually have more complex wishes and the women or men capable of providing a fond memory and wish-fulfillment on multiple levels for them are rare. Save for later, perhaps, the question whether deep feelings for cash is ultimately a good exchange.

prostitutes and CEOs


Several U.S. CEOs have made $5500 per working hour this past year. I think the escorts do more to earn those dollars than the businessmen.

The Point


I really thought the point of the comment was that on entering the profession a woman, for the most part, has to realise that once a man who is not a client, but a potential "suitor" discovers how she makes a living the chances of a marriage proposal will greatly diminish. Thus the trade-off: high prices for a career in prostitution to compensate for the decision to more than likely forego the prospect of marriage.

missing the point


I agree that the article misses the point completely, and also seems to have been written without any real research -- there have been way too many books and articles on the industry for such a blushing and inaccurate portrayal of it to be OK.

The obvious point being missed by everyone is that high end prostitutes do not have to establish their worth to the entire market -- but only to those people who are paying for them. Those men are the CEO's and financial executives and entertainment industry folks (for the most part) and $5000 an hour isn't a big deal to them at all.

What she is paid isn't what she is worth to YOU, or even what she is worth to herself -- she is paid what the men who pay her are willing to pay her. Why that number shocks you is that you don't live in their world. What is shocking is to see the example of the disparity between what the elite earn in our world vs. regular people.

High Dollar Hotties


There is a high-end market known as "High Dollar Hotties" that exist in our world of demimonde. Most of these ladies hold MAs and BSs with a few holding pHDs. This market of HDH's is well represented amongst the best of the best, highly educated, affluential, well-rounded ladies who can hold their own in any circumstances. Yes, we can and do demand higher rates than most and it is because we can.

One thing i've noticed amongst the many HDHs in the escort industry is.... their self-confidence and self-esteem goes way beyond any dollar amount any of them could command... and the gentlemen that frequent their services know they are getting the best of the best.

One wonders if all highly


One wonders if all highly sexed women are considered victims of abuse by the author, or is that astoundingly incorrect "insight" only applicable to those who receive money?

er...


well that makes sense if they were someone else's wife..

... afterall, who would pay their wife for sex? even if someone knew his wife was a prostitute, i doubt she would charge him for sex... and i doubt he'd be willing to pay his own wife for sex.

Sigh.


This is an annoyingly ubiquitous claim: that most prostitutes were victims of incest/sexual abuse when they were children. But according to statistics on sexual abuse, one out of every three girls will be sexually abused before their 18th birthday (cvclv.org). If sexual abuse is this common among all women, it isn't surprising it might be this common among any subset of women (such as waitresses or prostitutes).

But one never hears anyone tsk-tsking over how waitresses are abused sexually as children, and attributing that sexual abuse to why they ended up as waitresses.

May I know your age range?


May I know your age range? Can you be knowledgeable at 'the world and people' while young and physically appealing to the most picky eyes?

Prostitution is not legal in


Prostitution is not legal in the UK

Intelligent Prostitution


There have been several comments that point to the desirability of an intelligent, well-read prostitute, or "genuinely emotional" prostitute.

But would this command a premium in the market? Do clients respect the intellect of the person they are about to live out their fantasy with, engage in some bizarre sexual perversion with? Clients have got an hour and they are horny. They've got a desire. These clients can satisfy their intellectual cravings with a book, or over dinner. I suppose that some clients have a terribly dull life, or feel highly unfulfilled, and thus will pay for high-end, educated prostitutes. But could this be the majority? What would this say about the type of people who need prostitutes.

I will say nothing of the morality of prostitution, I am speaking to the apparent delusion that prostitutes are costly due to their ability to discuss politics or modern art. And, no, prostitutes, I am not calling you stupid, though perhaps a little delusional.

no sympathy


you have to be a very rich moron to pay any chick $5,000 for an hour or even a weekend of sex. if you use a condom, i would go with the $100 thailand variety -- no comparison with some spoiled nj golddigging wannabe bitch who didn't look that great anyway.

Prostitution


This post sounds utterly phony, the wistful fantasy of
some cackling nerd. Putting your head on the pillow for
money doesn't need an advanced degree in comparative
literature. I doubt horny execs with thousands to spend
care to parse the subtleties in Chekov's stories or
Ionesco's plays...BB

UK Prostitution


Actually in the UK prostitution IS legal as long as one does it no more than twice every 3 months.

I imagine that you're the


I imagine that you're the kind of person who goes to Olive Garden and considers it fine dining. Past the basic service, there are subtleties in presentation and technique that create a wide discrepancy in prices in exchange for all sorts of commodities. If you aren't capable of appreciating that, by all means, go with the McLay, but when you do appreciate these things, you're willing to pay top dollar to get them.



And thank you for sharing your willingness to support a sex trade that's founded on the exploitation and abuse of women and children, rather than one that empowers workers with financial freedom and choice. That's very bold of you.

nonfiction


if you read the nonfiction book titled:

"hello my big big honey!"
love letters to bangkok bar girls and their revealing interviews

it may answer many of the questions on this thread.

the love letters are written by *western* men to *eastern* bar girls, and the interviews are q & a with the women. plus a mama-san, bar owners, etc.

google it and you will find lots of free excerpts

ciao,

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