Super Freakonomics Part 6

She was immediately tempted to take up prost.i.tution full-time, but she was worried her family and friends would find out. So she eased into it, booking mainly out-of-town liaisons. She curtailed her programming hours but even so found the job stultifying. That's when she decided to move to Chicago.

Yes, it was a big city, which Allie found intimidating, but unlike New York or Los Angeles, it was civil enough to make a southern girl feel at home. She built a website (those computer skills came in handy) and, through intensive trial and error, determined which erotic-services sites would help her attract the right kind of client and which ones would waste her ad dollars. (The winners were Eros.com and BigDoggie.net.)

Running a one-woman operation held several advantages, the main one being that she didn't have to share her revenues with anyone. In the old days, Allie probably would have worked for someone like the Everleigh sisters, who paid their girls handsomely but took enough off the top to make themselves truly rich. The Internet let Allie be her own madam and acc.u.mulate the riches for herself. Much has been said of the Internet's awesome ability to "disintermediate"-to cut out the agent or middleman-in industries like travel, real estate, insurance, and the sale of stocks and bonds. But it is hard to think of a market more naturally suited to disintermediation than high-end prost.i.tution.

The downside was that Allie had no one but herself to screen potential clients and ensure they wouldn't beat her up or rip her off. She hit upon a solution that was as simple as it was smart. When a new client contacted her online, she wouldn't book an appointment until she had secured his real name and his work telephone number. Then she'd call him the morning of their date, ostensibly just to say how excited she was to meet him.

But the call also acknowledged that she could reach him at will and, if something were to go wrong, she could storm his office. "n.o.body wants to see the 'crazy ho' routine," she says with a smile. To date, Allie has resorted to this tactic only once, after a client paid her in counterfeit cash. When Allie visited his office, he promptly located some real money.

She saw clients in her apartment, mainly during the day. Most of them were middle-aged white men, 80 percent of whom were married, and they found it easier to slip off during work hours than explain an evening absence. Allie loved having her evenings free to read, go to the movies, or just relax. She set her fee at $300 an hour-that's what most other women of her caliber seemed to be charging-with a few discount options: $500 for two hours or $2,400 for a twelve-hour sleepover. About 60 percent of her appointments were for a single hour.

Her bedroom-"my office," she calls it with a laugh-is dominated by a ma.s.sive Victorian four-poster, its carved mahogany pillars draped with an off-white silk crepe. It is not the easiest bed to mount. When asked if any of her clients have difficulty doing so, she confesses that one portly gentleman actually broke the bed not long ago.

What did Allie do?

"I told him that the d.a.m.n thing was already broken, and I was sorry I hadn't gotten it fixed."

She is the kind of person who sees something good in everyone-and this, she believes, has contributed to her entrepreneurial success. She genuinely likes the men who come to her, and the men therefore like Allie even beyond the fact that she will have s.e.x with them. Often, they bring gifts: a $100 gift certificate from Amazon.com; a nice bottle of wine (she Googles the label afterward to determine the value); and, once, a new MacBook. The men sweet-talk her, and compliment her looks or the decor. They treat her, in many ways, as men are expected to treat their wives but often don't.

Most women of Allie's pay grade call themselves "escorts." When Allie discusses her friends in the business, she simply calls them "girls." But she isn't fussy. "I like hooker, I like wh.o.r.e, I like them all," she says. "Come on, I know what I do, so I'm not trying to b.u.t.ter it up." Allie mentions one friend whose fee is $500 an hour. "She thinks she's nothing like the girls on the street giving b.l.o.w. .j.o.bs for $100, and I'm like, 'Yes, honey, you're the same d.a.m.n thing.'"

About this, Allie is likely wrong. Although she views herself as similar to a street prost.i.tute, she has less in common with that kind of woman than she does with a trophy wife. Allie is essentially a trophy wife who is rented by the hour. She isn't really selling s.e.x, or at least not s.e.x alone. She sells men the opportunity to trade in their existing wives for a younger, more s.e.xually adventurous version-without the trouble and long-term expense of actually having to go through with it. For an hour or two, she represents the ideal wife: beautiful, attentive, smart, laughing at your jokes and satisfying your l.u.s.t. She is happy to see you every time you show up at her door. Your favorite music is already playing and your favorite beverage is on ice. She will never ask you to take out the trash.

Allie says she is "a little more liberal" than some prost.i.tutes when it comes to satisfying a client's unusual request. There was, for instance, the fellow back in Texas who still flew her in regularly and asked her to incorporate some devices he kept in a briefcase in a session most people wouldn't even recognize as s.e.x per se. But she categorically insists that her clients wear a condom.

What if a client offered her $1 million to have s.e.x without a condom?

Allie pauses to consider this question. Then, exhibiting a keen understanding of what economists call adverse selection, she declares that she still wouldn't do it-because any client crazy enough to offer $1 million for a single round of unprotected s.e.x must be so crazy that he should be avoided at all costs.

When she started out in Chicago, at $300 an hour, the demand was nearly overwhelming. She took on as many clients as she could physically accommodate, working roughly thirty hours a week. She kept that up for a while, but once she paid off her car and built up some cash reserves, she scaled back to fifteen hours a week.

Even so, she began to wonder if one hour of her time was more valuable to her than another $300. As it was, a fifteen-hour workload generated more than $200,000 a year in cash.

Eventually she raised her fee to $350 an hour. She expected demand to fall, but it didn't. So a few months later, she raised it to $400. Again, there was no discernible drop-off in demand. Allie was a bit peeved with herself. Plainly she had been charging too little the whole time. But at least she was able to strategically exploit her fee change by engaging in a little price discrimination. She grandfathered in her favorite clients at the old rate but told her less-favorite clients that an hour now cost $400-and if they balked, she had a handy excuse to cut them loose. There were always more where they came from.

It wasn't long before she raised her fee again, to $450 an hour, and a few months later to $500. In the s.p.a.ce of a couple of years, Allie had increased her price by 67 percent, and yet she saw practically no decrease in demand.

Her price hikes revealed another surprise: the more she charged, the less actual s.e.x she was having. At $300 an hour, she had a string of one-hour appointments with each man wanting to get in as much action as he could. But charging $500 an hour, she was often wined and dined-"a four-hour dinner date that ends with a twenty-minute s.e.xual encounter," she says, "even though I was the same girl, dressed the same, and had the same conversations as when I charged $300."

She figured she may have just been profiting from a strong economy. This was during 2006 and 2007, which were go-go years for many of the bankers, lawyers, and real-estate developers she saw. But Allie had found that most people who bought her services were, in the language of economics, price insensitive. Demand for s.e.x seemed relatively uncoupled from the broader economy.

Our best estimate is that there are fewer than one thousand prost.i.tutes like Allie in Chicago, either working solo or for an escort service. Street prost.i.tutes like LaSheena might have the worst job in America. But for elite prost.i.tutes like Allie, the circ.u.mstances are completely different: high wages, flexible hours, and relatively little risk of violence or arrest. So the real puzzle isn't why someone like Allie becomes a prost.i.tute, but rather why more women don't choose this career.

Certainly, prost.i.tution isn't for every woman. You have to like s.e.x enough, and be willing to make some sacrifices, like not having a husband (unless he is very understanding, or very greedy). Still, these negatives just might not seem that important when the wage is $500 an hour. Indeed, when Allie confided to one longtime friend that she had become a prost.i.tute and described her new life, it was only a few weeks before the friend joined Allie in the business.

Allie has never had any trouble with the police, and doesn't expect to. The truth is that she would be distraught if prost.i.tution were legalized, because her stratospherically high wage stems from the fact that the service she provides cannot be gotten legally.

Allie had mastered her domain. She was a shrewd entrepreneur who kept her overhead low, maintained quality control, learned to price-discriminate, and understood well the market forces of supply and demand. She also enjoyed her work.

But all that said, Allie began looking for an exit strategy. She was in her early thirties by now and, while still attractive, she understood that her commodity was perishable. She felt sorry for older prost.i.tutes who, like aging athletes, didn't know when to quit. (One such athlete, a future Hall of Fame baseball player, had propositioned Allie while she was vacationing in South America, not knowing that she was a professional. Allie declined, uninterested in a busman's holiday.)

She had also grown tired of living a secret life. Her family and friends didn't know she was a prost.i.tute, and the constant deception wore her out. The only people with whom she could be unguarded were other girls in the business, and they weren't her closest friends.

She had saved money but not enough to retire. So she began casting about for her next career. She got her real-estate license. The housing boom was in full swing, and it seemed pretty simple to transition out of her old job and into the new, since both allowed a flexible schedule. But too many other people had the same idea. The barrier to entry for real-estate agents is so low that every boom inevitably attracts a swarm of new agents-in the previous ten years, membership in the National a.s.sociation of Realtors had risen 75 percent-which has the effect of depressing their median income. And Allie was aghast when she realized she'd have to give half of her commission to the agency that employed her. That was a steeper cut than any pimp would dare take!

Finally Allie realized what she really wanted to do: go back to college. She would build on everything she'd learned by running her own business and, if all went well, apply this newfound knowledge to some profession that would pay an insanely high wage without relying on her own physical labor.

Her chosen field of study? Economics, of course.

CHAPTER 2

WHY SHOULD SUICIDE BOMBERS BUY LIFE INSURANCE?

If you know someone in southeastern Uganda who is having a baby next year, you should hope with all your heart that the baby isn't born in May. If so, it will be roughly 20 percent more likely to have visual, hearing, or learning disabilities as an adult.

Three years from now, however, May would be a fine month to have a baby. But the danger will have only shifted, not disappeared; April would now be the cruelest month.

What can possibly account for this bizarre pattern? Before you answer, consider this: the same pattern has been identified halfway across the world, in Michigan. In fact, a May birth in Michigan might carry an even greater risk than in Uganda.

The economists Douglas Almond and Bhashkar Mazumder have a simple answer for this strange and troubling phenomenon: Ramadan.

Some parts of Michigan have a substantial Muslim population, as does southeastern Uganda. Islam calls for a daytime fast from food and drink for the entire month of Ramadan. Most Muslim women partic.i.p.ate even while pregnant; it's not a round-the-clock fast, after all. Still, as Almond and Mazumder found by a.n.a.lyzing years' worth of natality data, babies that were in utero during Ramadan are more likely to exhibit developmental aftereffects. The magnitude of these effects depends on which month of gestation the baby is in when Ramadan falls. The effects are strongest when fasting coincides with the first month of pregnancy, but they can occur if the mother fasts at any time up to the eighth month.

Islam follows a lunar calendar, so the month of Ramadan begins eleven days earlier each year. In 2009, it ran from August 21 to September 19, which made May 2010 the unluckiest month in which to be born. Three years later, with Ramadan beginning on July 20, April would be the riskiest birth month. The risk is magnified when Ramadan falls during summertime because there are more daylight hours-and, therefore, longer periods without food and drink. That's why the birth effects can be stronger in Michigan, which has fifteen hours of daylight during summer, than in Uganda, which sits at the equator and therefore has roughly equal daylight hours year-round.

It is no exaggeration to say that a person's entire life can be greatly influenced by the fluke of his or her birth, whether the fluke is one of time, place, or circ.u.mstance. Even animals are susceptible to this natal roulette. Kentucky, the capital of Thoroughbred horse breeding, was. .h.i.t by a mysterious disease in 2001 that left 500 foals stillborn and resulted in about 3,000 early fetal losses. In 2004, as this diminished cohort of three-year-olds came of age, two of the three Triple Crown races were won by Smarty Jones, a colt whose dam was impregnated in Kentucky but returned home to Pennsylvania before she could be afflicted.

Such birth effects aren't as rare as you might think. Douglas Almond, examining U.S. Census data from 1960 to 1980, found one group of people whose terrible luck persisted over their whole lives. They had more physical ailments and lower lifetime income than people who'd been born just a few months earlier or a few months later. They stood out in the census record like a layer of volcanic ash stands out in the archaeological record, a thin stripe of ominous sediment nestled between two thick bands of normalcy.

What happened?

These people were in utero during the "Spanish flu" pandemic of 1918. It was a grisly plague, killing more than half a million Americans in just a few months-a casualty toll, as Almond notes, greater than all U.S. combat deaths during all the wars fought in the twentieth century.

More than 25 million Americans, meanwhile, contracted the flu but survived. This included one of every three women of childbearing age. The infected women who were pregnant during the pandemic had babies who, like the Ramadan babies, ran the risk of carrying lifelong scars from being in their mothers' bellies at the wrong time.

Other birth effects, while not nearly as dire, can exert a significant pull on one's future. It is common practice, especially among economists, to co-write academic papers and list the authors alphabetically by last name. What does this mean for an economist who happened to be born Albert Zyzmor instead of, say, Albert Aab? Two (real) economists addressed this question and found that, all else being equal, Dr. Aab would be more likely to gain tenure at a top university, become a fellow in the Econometric Society (hooray!), and even win the n.o.bel Prize.

"Indeed," the two economists concluded, "one of us is currently contemplating dropping the first letter of her surname." The offending name: Yariv.

Or consider this: if you visit the locker room of a world-cla.s.s soccer team early in the calendar year, you are more likely to interrupt a birthday celebration than if you arrive later in the year. A recent tally of the British national youth leagues, for instance, shows that fully half of the players were born between January and March, with the other half spread out over the nine remaining months. On a similar German team, 52 elite players were born between January and March, with just 4 players born between October and December.