Prostitution Externalities

I think Adam Ozimek’s post on “The Visceral Externality of Prostitution” nicely illustrates why nobody likes economists:

Say Ray’s friend Lenore wants to purchase Ray’s prostitution services and she values them at $400. But when Lenore does this it bothers Ray’s other friend Tonya. If the negative utility Tonya experiences is worth more than $400, then the market provides a mechanism for Tonya to satisfy her wants: she can pay Ray $401 not to sleep with Lenore. […]

People will probably object that this is unbelievable, and that even if it happened once in a while, in the real world this would never be enough objectors to affect the quantity of prostitution. I think this is correct. After all, the objectors would have to value preventing prostitution at more than average rate of $300 an hour in order to outbid the existing buyers. But what this tells you is that the marginal utility gained from prostitution by consumers would vastly exceeds the marginal disutility to objectors.

I think objectors know. After all, market based solutions are possible and yet you never hear objectors push for anything but prohibition. This tells me that their willingness to pay is pretty low, and therefore so is their disutility.

This misses the fact that a big part of the point of prostitution prohibition laws is to express social disapproval of prostitutes and prostitution. Indeed, people seem generally quite unconcerned about whether prostitution is occurring someplace out of sight and out of mind. But they want to reserve the right to strongly disapprove of both the prostitution and especially the prostitutes. You can analogize a person who engaged in a form of sexual or commercial conduct of which you disapprove by referring to that person as a “whore.” It’s an insult. Its insult status reflects and upholds a social consensus that whores are bad people, not just that whoring is a kind of undesirable nuisance. Side-payments can’t address this issue.


I think the best way to think about prostitution prohibition is just to observe that we’ve historically done a lot of stuff to bolster the privileged position of heterosexual companionate marriage. This has entailed a lot of avoidable cruelty to gays and lesbians, sexually active women, children of unmarried women, and voluntary prostitutes. But the cruelty isn’t a pointless side-effect that can be reduced through better policy design. The cruelty is integral to obtaining the objective. Over time, counterveiling humane impulses have tended to win out. But that’s the issue.