Super Freakonomics Part 5

Sound absurd?

The strongest evidence for this argument comes from an unlikely source: the long-loved American tradition known as the family reunion. Every summer around the Fourth of July holiday, Washington Park is thronged with families and other large groups who get together for cookouts and parties. For some of these visitors, catching up with Aunt Ida over lemonade isn't quite stimulating enough. It turns out that the demand for prost.i.tutes in Washington Park skyrockets every year during this period.

And the prost.i.tutes do what any good entrepreneur would do: they raise prices by about 30 percent and work as much overtime as they can handle.

Most interestingly, this surge in demand attracts a special kind of worker-a woman who steers clear of prost.i.tution all year long but, during this busy season, drops her other work and starts turning tricks. Most of these part-time prost.i.tutes have children and take care of their households; they aren't drug addicts. But like prospectors at a gold rush or Realtors during a housing boom, they see the chance to cash in and jump at it.

As for the question posed in this chapter's t.i.tle-How is a street prost.i.tute like a department-store Santa?-the answer should be obvious: they both take advantage of short-term job opportunities brought about by holiday spikes in demand.

We've already established that demand for prost.i.tutes is far lower today than it was sixty years ago (if offset a bit by holiday surges), in large part because of the feminist revolution.

If you found that surprising, consider an even more unlikely victim of the feminist revolution: schoolchildren.

Teaching has traditionally been dominated by women. A hundred years ago, it was one of the few jobs available to women that didn't involve cooking, cleaning, or other menial labor. (Nursing was another such profession, but teaching was far more prominent, with six teachers for every nurse.) At the time, nearly 6 percent of the female workforce were teachers, trailing only laborers (19 percent), servants (16 percent), and laundresses (6.5 percent). And by a large margin it was the job of choice among college graduates. As of 1940, an astonishing 55 percent of all college-educated female workers in their early thirties were employed as teachers.

Soon after, however, opportunities for smart women began to multiply. The Equal Pay Act of 1963 and the Civil Rights Act of 1964 were contributing factors, as was the societal shift in the perception of women's roles. As more girls went off to college, more women emerged ready to join the workforce, especially in the desirable professions that had been largely off-limits: law, medicine, business, finance, and so on. (One of the unsung heroes of this revolution was the widespread use of baby formula, which allowed new mothers to get right back to work.)

These demanding, compet.i.tive professions offered high wages and attracted the best and brightest women available. No doubt many of these women would have become schoolteachers had they been born a generation earlier.

But they didn't. As a consequence, the schoolteacher corps began to experience a brain drain. In 1960, about 40 percent of female teachers scored in the top quintile of IQ and other apt.i.tude tests, with only 8 percent in the bottom. Twenty years later, fewer than half as many were in the top quintile, with more than twice as many in the bottom. It hardly helped that teachers' wages were falling significantly in relation to those of other jobs. "The quality of teachers has been declining for decades," the chancellor of New York City's public schools declared in 2000, "and no one wants to talk about it."

This isn't to say that there aren't still a lot of great teachers. Of course there are. But overall teacher skill declined during these years, and with it the quality of cla.s.sroom instruction. Between 1967 and 1980, U.S. test scores fell by about 1.25 grade-level equivalents. The education researcher John Bishop called this decline "historically unprecedented," arguing that it put a serious drag on national productivity that would continue well into the twenty-first century.

But at least things worked out well for the women who went into other professions, right?

Well, sort of. As we wrote earlier, even the best-educated women earn less than their male counterparts. This is especially true in the high-flying financial and corporate sectors-where, moreover, women are vastly underrepresented. The number of female CEOs has increased roughly eightfold in recent years, but women still hold less than 1.5 percent of all CEO positions. Among the top fifteen hundred companies in the United States, only about 2.5 percent of the highest-paying executive positions are held by women. This is especially surprising given that women have earned more than 30 percent of all the master's in business administration (MBA) degrees at the nation's top colleges over the past twenty-five years. Their share today is at its highest yet, 43 percent.

The economists Marianne Bertrand, Claudia Goldin, and Lawrence Katz tried to solve this wage-gap puzzle by a.n.a.lyzing the career outcomes of more than 2,000 male and female MBAs from the University of Chicago.

Their conclusion: while gender discrimination may be a minor contributor to the male-female wage differential, it is desire-or the lack thereof-that accounts for most of the wage gap. The economists identified three main factors:

Women have slightly lower GPAs than men and, perhaps more important, they take fewer finance courses. All else being equal, there is a strong correlation between a finance background and career earnings.Over the first fifteen years of their careers, women work fewer hours than men, 52 per week versus 58. Over fifteen years, that six-hour difference adds up to six months' less experience.Women take more career interruptions than men. After ten years in the workforce, only 10 percent of male MBAs went for six months or more without working, compared with 40 percent of female MBAs.

The big issue seems to be that many women, even those with MBAs, love kids. The average female MBA with no children works only 3 percent fewer hours than the average male MBA. But female MBAs with children work 24 percent less. "The pecuniary penalties from shorter hours and any job discontinuity among MBAs are enormous," the three economists write. "It appears that many MBA mothers, especially those with well-off spouses, decided to slow down within a few years following their first birth."

This is a strange twist. Many of the best and brightest women in the United States get an MBA so they can earn high wages, but they end up marrying the best and brightest men, who also earn high wages-which affords these women the luxury of not having to work so much.

Does this mean the women's investment of time and money in pursuing an MBA was poorly spent? Maybe not. Perhaps they never would have met such husbands if they hadn't gone to business school.

There's one more angle to consider when examining the male-female wage gap. Rather than interpreting women's lower wages as a failure, perhaps it should be seen as a sign that a higher wage simply isn't as meaningful an incentive for women as it is for men. Could it be that men have a weakness for money just as women have a weakness for children?

Consider a recent pair of experiments in which young men and women were recruited to take an SAT-style math test with twenty questions. In one version, every partic.i.p.ant was paid a flat rate, $5 for showing up and another $15 for completing the test. In the second version, partic.i.p.ants were paid the $5 show-up fee and another $2 for each correct answer.

How'd they do?

In the flat-rate version, the men performed only slightly better, getting 1 more correct answer out of 20 than the women. But in the cash-incentive version, the men blew away the women. The women's performance barely budged when compared with the flat-rate version, whereas the average man scored an extra 2 correct questions out of the 20.

Economists do the best they can by a.s.sembling data and using complex statistical techniques to tease out the reasons why women earn less than men. The fundamental difficulty, however, is that men and women differ in so many ways. What an economist would really like to do is perform an experiment, something like this: take a bunch of women and clone male versions of them; do the reverse for a bunch of men; now sit back and watch. By measuring the labor outcomes of each gender group against their own clones, you could likely gain some real insights.

Or, if cloning weren't an option, you could take a bunch of women, randomly select half of them, and magically switch their gender to male, leaving everything else about them the same, and do the opposite with a bunch of men.

Unfortunately, economists aren't allowed to conduct such experiments. (Yet.) But individuals can if they want to. It's called a s.e.x-change operation.

So what happens when a man decides to employ surgery and hormone therapy to live as a woman (a so-called MTF, or male-to-female transgender) or when a woman decides to live as a man (an FTM, or female-to-male)?

Ben Barres, a Stanford neurobiologist, was born Barbara Barres and became a man in 1997, at the age of forty-two. Neurobiology, like most math and science disciplines, is heavily populated by men. His decision "came as a surprise to my colleagues and students," he notes, but they "have all been terrific about it." Indeed, his intellectual stature seems to have increased. Once, after Barres gave a seminar, a fellow scientist turned to a friend of Barres's in the audience and issued this left-handed compliment: "Ben Barres's work is much better than his sister's." But Barres doesn't have a sister; the commenter was slighting Barres's former, female self.

"It is much harder for men to transition to women than for women to transition to men," Barres admits. The problem, he says, is that males are presumed to be competent in certain fields-especially areas like science and finance-while females are not.

On the other hand, consider Deirdre McCloskey, a prominent economist at the University of Illinois at Chicago. She was born a male, Donald, and decided to become a woman in 1995, at the age of fifty-three. Economics, like neuroscience, is a heavily male field. "I was prepared to move to Spokane and become a secretary in a grain elevator," she says. That proved unnecessary, but McCloskey did "detect a queerness penalty toward me in some of the economics profession. I reckon I'd make a little more money now if I were still Donald."

McCloskey and Barres are just two data points. A pair of researchers named Kristen Schilt and Matthew Wiswall wanted to systematically examine what happens to the salaries of people who switched gender as adults. It is not quite the experiment we proposed above-after all, the set of folks who switch gender aren't exactly a random sample, nor are they the typical woman or man before or after-but still, the results are intriguing. Schilt and Wiswall found that women who become men earn slightly more money after their gender transitions, while men who become women make, on average, nearly one-third less than their previous wage.

Their conclusion comes with a number of caveats. For starters, the sample set was very small: just fourteen MTFs and twenty-four FTMs. Furthermore, the people they studied were mainly recruited at transgender conferences. That puts them in the category of what Deirdre McCloskey calls "professional gender crossers," who aren't necessarily representative.

"One could easily believe," she says, "that people who do not just become women and then get on with their lives, but keep looking back, are not going to be the most successful people in the workplace." (She may have changed gender, but once an economist, always an economist.)

Back in Chicago, in a chic neighborhood just a few miles from where the street prost.i.tutes work, lives someone who was born female, stayed that way, and makes more money than she ever thought possible.

She grew up in a large and largely dysfunctional family in Texas and left home to join the military. She trained in electronics and worked in research and development on navigation systems. When she rejoined the civilian world seven years later, she took a job in computer programming with one of the world's largest corporations. She made a solid five-figure salary and married a man who earned well into six figures as a mortgage broker. Her life was a success, but it was also-well, it was boring.

She got divorced (the couple had no children) and moved back to Texas, in part to help care for a sick relative. Working once again as a computer programmer, she remarried but this marriage also failed.

Her career wasn't going much better. She was smart, capable, technically sophisticated, and she also happened to be physically attractive, a curvaceous and friendly blonde whose attributes were always well appreciated in her corporate setting. But she just didn't like working all that hard. So she became an entrepreneur, launching a one-woman business that enabled her to work just ten or fifteen hours a week and earn five times her old salary. Her name is Allie, and she is a prost.i.tute.

She fell into the profession by accident, or at least on a lark. Her family was devout Southern Baptist, and Allie had grown up "very straitlaced," she says. As an adult, she was the same. "You know, yard-of-the-month in the suburbs, no more than two beers a night and never before seven." But as a young divorcee, she started visiting online dating sites-she liked men, and she liked s.e.x-and just for fun listed "escort" on her profile. "I mean, it was so instantaneous," she recalls. "I just thought I'd put it up and see what happens."

Her computer was instantly flooded with replies. "I started hitting minimize, minimize, minimize, just so I could keep up!"

She arranged to meet a man at two o'clock on a weekday afternoon at a hotel, in the southwest corner of its parking lot. He'd be driving a black Mercedes. Allie had no idea what to charge. She was thinking about $50.

He was a dentist-physically unintimidating, married, and perfectly kind. Once inside the room, Allie undressed nervously. She can no longer recall the particulars of the s.e.x ("it's all a big blur by this point," she says) but does remember that "it was nothing really kinky or anything."

When they were done, the man put some money on the dresser. "You've never done this before, have you?" he asked.

Allie tried to fib, but it was useless.

"Okay," he said, "this is what you need to do." He began to lecture her. She had to be more careful; she shouldn't be willing to meet a stranger in a parking lot; she needed to know something in advance about her clients.

"He was the perfect first date," Allie says. "To this day, I remain grateful."

Once he left the room, Allie counted the cash on the dresser: $200. "I'd been giving it away for years, and so the fact that someone was going to give me even a penny-well, that was shocking."