Shining New Light on a ‘Red Light’ Profession Oxford handbook co-edited by UCLA Luskin researcher compiles latest economic research on prostitution

By Stan Paul

Although prostitution has been examined by various social scientists, the “world’s oldest profession” has received less attention from an economic standpoint. But that’s changing.

Thanks to the increasing availability of existing data sets on the internet, as well as new surveys that are being implemented, researchers have been able to gather valuable economic data that could help government officials in setting policy guidelines concerning prostitution.

A number of factors, including the proliferation of sexually transmitted infections (STI) and HIV/AIDS, especially in developing nations, have created the need to look at prostitution through an economic lens.

These subjects and other topics dealing with the sex trade are part of the newly published “Oxford Handbook of the Economics of Prostitution,” co-edited by UCLA Luskin School of Public Affairs researcher Manisha Shah and Scott Cunningham, associate professor of economics at Baylor University. A development economist and associate professor in the Department of Public Policy, Shah’s teaching and research interests focus on the intersection of applied microeconomics, health and development.

Researchers in fields from anthropology to sociology have looked at various facets of prostitution both qualitatively and quantitatively. The book’s co-editors cite the nature of economics as looking at problems in mostly quantitative terms, and the new data is yielding a wealth of useful — and often counterintuitive — information on this resilient underground economy.

“I think one of the things that always surprises me is how often the sex market looks like any other market that economists study,” said Shah, who has written on the topic in order to learn how more-effective policies and programs can be deployed to slow the spread of HIV/AIDS and other STIs.

“Most of the time, the predictions of economic theory play out in the sex market as well,” Shah said. “There are so many chapters that highlight this and illustrate that sex workers respond to incentives and prices in the same way that other market participants do.”

More than 40 researchers from around the world contributed to the book, divided into six parts: Supply and Demand, Sex Workers in Developing Countries, Men Who Have Sex With Men, Law and Policy, History of Prostitution Law, and Externalities: Sexually Transmitted Infections and Sexual Exploitation. Chapters include Economics of Sex Work in Bangladesh, Violence and Entry in Prostitution Markets and A Method for Determining the Size of the Underground Economy in in Seven U.S. Cities.

“We know that prostitution has important policy implications because of the effect that prostitution has on STI rates, risky behaviors, as well as its responsiveness to poverty,” Shah said. “But we don’t know as much about optimal policy design.” In addition, she said, most governments have not experimented with different strategies, so prohibition has been the most common policy.

The book also contains chapters that explain and use information collected directly from the web because prostitution continues to shift from the street to indoor sex work. Shah points out that the internet facilitates the functioning of illicit markets through free classified advertising, lower search costs and even client reviews of sex workers.

“Reviews create reputations for sex workers, much like eBay and Airbnb reviews create reputations for vendors,” said Shah, explaining that these “reputation mechanisms” are allowing illegal markets to function more like legal businesses. Shah said this is an important point because, in the illegal sector, providers and clients cannot access legal courts to enforce contracts.

“Reputation, in other words, is the mechanism by which contracts are enforced in illegal sex markets,” Shah said.

Policy makers need to understand the distinction between voluntary prostitution and sex trafficking, Shah said. “Too often these two get conflated. The social costs of sex trafficking are very high, whereas arguably the social costs of voluntary prostitution are lower.”

Pointing to recent government experiments in Sweden and New Zealand, for example, Shah said that policy makers should have a working understanding of how these markets function, as well as understanding theories of policies that can regulate these markets optimally.

“Policy makers can use this information to better design policies that can reduce sex trafficking as well as accompanying externalities,” Shah said, citing a detailed analysis of the Nevada brothel system, which, she said, “can help policy makers understand if there are elements of the Nevada policy that could be applied elsewhere.”

Shah said that with a better understanding of how these markets operate, optimal policies can be designed to reduce the harm associated with prostitution markets and lower the overall social costs.

“The book has explicit models to guide the design of prostitution laws,” Shah said. “We think these are one of the highlights of the handbook in general.”

Are Workfare Programs In India Effective? Public Policy professor Manisha Shah evaluates the impact of antipoverty programs

By Stan Paul 

Manisha Shah’s work in development economics has taken her around the world, from Mexico and Ecuador to India and Indonesia.

Her work seeks to evaluate the impact of seemingly well-intentioned efforts such as antipoverty programs as well as their unintended consequences, using primary data collection and applied microeconomics as a tool. At home at the Luskin School, she is the Applied Policy Project coordinator for the Department of Public Policy’s Master of Public Policy (MPP) students. In addition, she teaches graduate courses in microeconomics as well as a course on international development.

In a recent working paper for the National Bureau of Economic Research (NBER), where she is a faculty research associate, Shah and her co-author, Bryce Steinberg, have evaluated the effect of India’s National Rural Employment Guarantee Scheme (NREGS). In “Workfare and Human Capital Investment: Evidence From India,” the authors posit that the NREGS workfare program, which requires beneficiaries to work on local public works projects in order to receive benefits, “could increase the opportunity cost of schooling, lowering human capital investment even as incomes increase due to increased labor demand.”

The research shows that this government program, one of the largest in the world, actually lowers both school enrollment and math scores for students ages 13 to 16. For boys in India, the antipoverty program has them substituting work for school, while adolescent girls are substituting into unpaid domestic work at home (since their mothers are now more likely to be working outside the home). Put in human terms, this means, according to Shah, that the program in India “may have caused anywhere from 650,000 to 2.5 million adolescents to leave school prematurely.”

Interestingly, the additional income from the workfare program may benefit the very young children in the household — the 2- to 4-year-olds. The authors find that human capital outcomes improve for the very youngest children as a result of NREGS.

Overall, the workfare program may serve as a disincentive for adolescents to invest in education. This is important to policy makers, who may be considering workfare as a means of poverty alleviation, says Shah. “If we believe education is important for economic growth, and that workfare programs raise prevailing wages and cause older students to substitute toward work and away from school, lump sum grants or conditional cash transfers might be other policy options to consider.”

“The takeaway from these results is that social programs have price effects, and that these price effects can have very real consequences,” Shah’s report concludes. “Ultimately it is important to maximize their potential to alleviate poverty and improve the lives of the poor.”

Other areas Shah has examined include child health and development. Recent work has involved evaluating impacts of improved sanitation on child health outcomes in rural Indonesia. She also has written on the economics of sex markets to learn how more effective policies and programs can be deployed to slow the spread of HIV/AIDS and other sexually transmitted infections.

Where will her research take her next?

Shah says her next destination is Tanzania in East Africa to study intervention programs for adolescent girls. Programs to help girls stay in school and avoid risky sex and its harmful consequences are proving unsuccessful. Shah wants to know what’s going on and why this is happening, looking to the data to provide answers.

Manisha Shah is an Associate Professor in the Department of Public Policy at the UCLA Luskin School of Public Affairs. She also is a Faculty Research Fellow at the National Bureau of Economic Research (NBER), a Faculty Affiliate at UC Berkeley’s Center for Effective Global Action (CEGA) and a Research Associate at the Institute for the Study of Labor (IZA).

Manisha Shah

Manisha Shah is the Franklin D. Gilliam, Jr., Endowed Chair in Social Justice and Professor of Public Policy at the UCLA Luskin School of Public Affairs and Founding Director of the Global Lab for Research in Action. Shah is also a Faculty Research Associate at the National Bureau of Economic Research, a Faculty Affiliate at UC Berkeley’s Center for Effective Global Action,  The Abdul Latif Jameel Poverty Action Lab, and The Bureau for Research and Economic Analysis of Development, and a Research Fellow at the Institute for the Study of Labor. Shah is an economist who received her Ph.D. from UC Berkeley.

Shah is a development economist whose primary research and teaching interests lie at the intersection of applied microeconomics, health, and development. She has written several papers on the economics of sex markets in order to learn how more effective policies and programs can be deployed to slow the spread of HIV/AIDS and other sexually transmitted infections. She also works in the area of child health and education. Shah has been the PI on various impact evaluations and randomized controlled trials and is currently leading projects in Tanzania, Indonesia, and India. She has also worked extensively in Ecuador and Mexico. Her research has been supported by Bill and Melinda Gates Foundation, William and Flora Hewlett Foundation, the World Bank, and the National Science Foundation among others. She is an editor at Journal of Health Economics and an Associate Editor at The Review of Economics and Statistics. Follow Shah on Twitter @Manisha_econ.

 

Published and Forthcoming Articles

Women’s Well-Being During a Pandemic and its Containment (with N. Bau, G. Khanna, C. Low, S. Sharmin, and A. Voena), 2021. NBER Working Paper 29121. forthcoming Journal of Development Economics.

Crimes against Morality: Unintended Consequences of Criminalizing Sex Work (with L. Cameron and J. Seager), Quarterly Journal of Economics.  February 2021, 136(1): 427–469.
Media Coverage: Probable CausationThe EconomistVoxDev
Policy Brief: Cato Brief

Aggregate Effects from Public Works: Evidence from India (with J. Cook), forthcoming The Review of Economics and Statistics.
Media Coverage: VoxDev

Workfare and Human Capital Investment: Evidence from India (with B. Steinberg),  Journal of Human Resources. Spring 2021, 56(2): 380–405.
Media Coverage: NBER Digest

The Right to Education Act: Trends in Enrollment, Test Scores, and School Quality (with B. Steinberg), AEA Papers and Proceedings, American Economic Association, May 2019, vol. 109, pages 232-238. NBER Version of Paper with appendix here.
Media Coverage: : VoxEU, IdeasForIndia

Scaling Up Sanitation: Evidence from an RCT in Indonesia (with L. Cameron and S. Olivia),  Journal of Development Economics, May 2019, vol 138.
Media Coverage: : VoxDev

Decriminalizing Prostitution: Implications for Sexual Violence and Public Health (with S. Cunningham), The Review of Economic Studies, July 2018, 85(3):1683–1715.
Selected Media Coverage: Vox, Slate, Washington Post, WSJ, LA Weekly, UCLA, KCRW interview, WHYY show, Seriouspod Podcast

Drought of Opportunities: Contemporaneous and Long Term Impacts of Rainfall Shocks on Human Capital (with B. Steinberg),  Journal of Political Economy, April 2017, 125(2).
Media Coverage: Ideas for India

Risk-Taking Behavior in the Wake of Natural Disasters  (with L. Cameron), Journal of Human Resources, Spring 2015, 50(2): 484-515.
Media Coverage: The Huffington Post

Can Mistargeting Destroy Social Capital and Stimulate Crime? Evidence from a Cash Transfer Program in Indonesia (with L. Cameron), Economic Development and Cultural Change, January 2014, 62(2): 381-415.

Do Sex Workers Respond to Disease? Evidence from the Male Market for Sex,  American Economic Review Papers & Proceedings, 2013, 103(3): 445-50.

Intra-household Resource Allocation: Do Parents Reduce or Reinforce Child Cognitive Ability Gaps? (with P. Frijters, D. Johnston, and M. Shields), Demography, December 2013, 50:6.

Compensated for Life: Sex Work and Disease Risk (with R. Arunachalam),  Journal of Human Resources, Spring 2013, 48:345-369.

Face Value: Information and Signaling in an Illegal Market (with T. Logan), Southern Economic Journal. 2013. 79(3), 529-564.

Handedness, Health and Cognitive Development: Evidence from Children in the NLSY (with D. Johnston, M. Nicholls, and M. Shields), Journal of the Royal Statistical Society, Series A (Statistics in Society), 2012. 

The Prostitute’s Allure: The Return to Beauty in Commercial Sex Work (with R. Arunachalam), B.E. Journal of Economic Analysis & Policy, 2012.

Sex Work and Infection: What’s Law Enforcement Got to Do with it? (with P. Gertler), Journal of Law and Economics, November 2011, 54.
Media Coverage: The Economist

To Work or Not to Work? Child Development and Maternal Labor Supply (with P. Frijters, D. Johnston, and M. Shields), American Economic Journal: Applied Economics, July 2009, 1(3): 97-110.

Nature’s Experiment? Handedness and Early Childhood Development  (with D. Johnston, M. Nicholls, and M. Shields), Demography, May 2009, 46(2): 281-302.

Prostitutes and Brides? (with R. Arunachalam),  American Economic Review Papers & Proceedings, May 2008, 98(2), 516-522.

Risky Business: The Market for Unprotected Commercial Sex (with P. Gertler and S. Bertozzi),  Journal of Political Economy, June 2005, 113(3), 518-550.
Media Coverage: NYTimes, Slate

Books and Handbook Chapters

Economics of Sex Work and Policy Considerations (with S. Cunningham). forthcoming in Handbook of Labor, Human Resources and Population Economics

The Oxford Handbook of the Economics of Prostitution. Scott Cunningham and Manisha Shah, editors. Oxford University Press, 2016.

Sex Work and Risky Sex in Developing Countries, In: Anthony J. Culyer (editor), Encyclopedia of Health Economics, Vol 3. San Diego: Elsevier; 2014. pp. 311-315.

Sex Work, with V. Rao, In The New Oxford Companion to Economics in India (Kaushik Basu and Annemie Maertens, editors), Delhi: Oxford University Press, Delhi, 2012.

Working Papers (Please email for most recent version)

Two Sides of Gender: Sex, Power, and Adolescence” (with J. Seager, J. Montalvao, and M. Goldstein), 2021.

Financial Incentives and Other Nudges Do Not Increase COVID-19 Vaccinations among the Vaccine Hesitant (with T. Chang, M. Jacobson, R. Pramanik & S. Shah). 2021. NBER Working Paper 29403.
Media Coverage: WSJ, MarketPlace, KCRW, Bloomberg, SF Chronicle.

Unintended Consequences of Lockdowns: COVID-19 and the Shadow Pandemic (with S. Ravindran), NBER Working Paper 27562. r&r Nature Human Behaviour.
Media Coverage: The Wall Street Journal, World Bank Development Impact Blog, The Hindu, The Indian Express (Front Page), India Today, Quartz India, Deccan Herald, Livemint.

Human Capital Investment in the Presence of Child Labor (with N. Bau, M. Rotemberg, and B. Steinberg), 2020. NBER Working Paper 27241.

How Does Health Promotion Work? Evidence From The Dirty Business of Eliminating Open Defecation (with P. Gertler, M. Alzua, L. Cameron, S. Martinez, and S. Patil). NBER Working Paper 20997.

Read more

Decriminalized Prostitution in Rhode Island Led to Fewer Rape, Gonorrhea Cases

A new working paper from Public Policy associate professor Manisha Shah and her co-author Scott Cunningham of Baylor University has made waves in the media for its groundbreaking research and surprising findings.

“Decriminalizing Indoor Prostitution: Implications for Sexual Violence and Public Health,” explores the results of seven years in Rhode Island’s history during which indoor prostitution was unintentionally decriminalized.

According to news reports, the state’s legislature amended a law in 1980 which created a legal loophole that decriminalized paid consensual sex if it took place privately indoors. This loophole went unnoticed until 2003, when police took a number of prostitutes to court and lost because of this unanticipated interpretation of the law. It wasn’t until 2009 that new legislation was passed to re-criminalize indoor prostitution.

For Shah and Cunningham, the incident served as a “natural experiment,” to explore the effect of decriminalizing indoor prostitution on the sex market, sexually transmitted infection, and the number of forcible female rape offenses.

Key findings from the study – that Rhode Island saw a large decrease in rapes and a large reduction in gonorrhea incidence for men and women post-2003 – have been widely covered by national and regional news media. Some reports note the fears of international organizations if prostitution is legalized.

Shah and Cunningham say more work needs to be done to evaluate the full spectrum of costs and benefits associated with the Rhode Island experiment, and how to better understand the precise mechanisms that link the reduction in enforcement and the announcement of the loophole in 2003 to reductions in reported rape offenses and STI outcomes.

The paper offers a number of reasons for the declines, including the possibility that the decrease in rapes was “due to men substituting away from rape toward prostitution.” Shah and Cunningham acknowledge that these are currently speculations.

“Technically, our study has internal validity but not necessarily external validity,” Shah said. “What this means is that while we can speak to the effect of decriminalization of prostitution in Rhode Island, we cannot take this and speak out of sample to some other policy environment. But, in that sense, our study is no different from nearly all studies that seek to evaluate some kind of intervention/policy change.

Their study also cannot speak to the effect of decriminalization on human trafficking, which is something that has come up in all the recent press, Shah and Cunningham said. Data limitations don’t allow them to perform a meaningful analysis of that topic.

“Our contribution to this literature is twofold,” Shah and Cunningham wrote. “First, as far as we know, we are the first social scientists to evaluate the decriminalization of prostitution using a natural experiment. This allows us to provide the first causal estimates on the impacts of decriminalization…Secondly, police agencies, lawmakers, and prosecutors all over the US have responded to the growth on the indoor sex market by reallocating large amounts of resources toward arresting sex workers. This reallocation has been considerably costly for local police since the indoor market is more diffuse and hidden. This research can influence change in policies related to police effort of enforcement of laws against prostitution, particularly related to indoor sex work.”

Shah and Cunningham hope that their paper will focus research and policy toward a more rigorous evaluation of prostitution law and policy that moves away from anecdotal work. They stress the importance of good quantitative information about the effects of policies to better understand the costs and benefits of various policy alternatives.

As for the study itself, Shah and Cunningham said they were both surprised and unsurprised by the findings.

“Everything about this experiment is unusual, so in a way, we didn’t know what was more surprising — that a state could “accidentally” legalize indoor prostitution, that no one would practically know about it for 23 years, that we would be successful at obtaining so many different sources of data to investigate it, or that we would find reductions in reported rape offenses and gonorrhea rates,” they said.

“When we started this project, we had to admit to ourselves that we really didn’t know what we should expect. Given there hasn’t been much policy experimentation around this phenomena and almost no causal evidence on the topic, policymakers and academics haven’t had quality findings upon which expectations could be based.”

Global Public Affairs Opens New Student-Faculty Discussion Series

By Adeney Zo
UCLA Luskin Student Writer

Learning can come in many forms, including class lectures, discussions and research, but the first Global Public Affairs salon aimed to combine these forms into one engaging multi-departmental, student-faculty discussion.

Put together by Urban Planning professors Michael Storper and Steve Commins, this salon created a space for students and faculty from widely varied backgrounds in Public Policy to discuss major global public affairs topics outside of the traditional lecture setting.

The main topic of the night centered around the Bill and Melinda Gates Foundation’s 2014 annual letter, titled “3 Myths That Block Progress for the Poor.” The letter aims to debunk the following three global affairs myths (through research and media examples):

  1. Poor countries are doomed to stay poor.
  2. Foreign aid is a big waste.
  3. Saving lives leads to overpopulation.

Once the debate commenced, students brought up points to defend or deconstruct each myth while faculty expanded on those ideas with information based on their own research and experience. Comments ranged from analysis of developmental markers to benefits of quantitative vs. qualitative data to dealing with corruption and misuse of foreign aid.

Professor Michael Storper led the discussion, emphasizing at the beginning that the goal of the salon was to take information learned in the classroom and apply it to engaging, intellectual debates. Other Luskin faculty members that participated included Steve Commins, Manisha Shah, Robert Schilling, Paavo Monkkonen and Susanna Hecht.