In an article I posted a year ago, I explained why “end demand” approach to prostitution is harmful to women in the sex trade. But since “end demand” approach is just as popular as it was back then, I thought I’d provide a little bit more detail on the economic logic behind this argument. I’m not an economist, and besides I don’t have any actual data to back up my theory, so I’d appreciate feedback from people who know more about economics than I do.

“End demand” approach is often promoted as the application of simple economic principle of supply and demand, even though there is not a single credible economist who supports the idea. Siddharth Kara, a former Merrill Lynch investment banker turned anti-trafficking activist and author of poorly written Sex Trafficking: Inside the Business of Modern Slavery, is frequently referred to as the “economist” who is in favor of “end demand” policy, but his training is in business management, not economics.

In “supply and demand” model, we expect the market to automatically arbitrate constantly updating levels of supply and demand through price. An increase in supply in excess of demand results in price drops, which would stimulate more demand to match the supply. A decrease in supply raises the price, which in turn reduces the demand for whatever is being sold. Similarly, an increase or decrease in demand can raise or drop the price, which encourage or discourage supply.

It is unquestionably true that there would be no sex trafficking (or consensual sex trade for that matter) if there weren’t any market for commercial sex, because market transactions require both buyers and sellers (whether the sellers are people engaging in sex trade, or pimps and traffickers who are selling another person’s sexual labor). But the total elimination of the market altogether is unrealistic and probably involve some sort of totalitarian government control over people’s lives that most of us are not willing to accept. We must, therefore, think about the impact of “end demand” approach on the assumption that prostitution would remain as an underground economy, rather than that it would be completely eliminated.

Let us first think about the market for an ordinary commodity, like wheat. Imagine that the government passed some policy–whether it’s a restriction or new taxation or whatever–designed to artificially discourage the demand for wheat. The price of wheat goes down, which would simultaneously encourage 1) farmers and producers of wheat to switch to producing other crops that are more profitable, and 2) consumers to buy more wheat and wheat-based products instead of some other crops because it’s now cheaper than before. In a free, competitive market, this whole process occurs smoothly and transparently until the market adjusts to the new equilibrium at different levels of transaction amount and price point.

The question we have to consider is what that equilibrium would look like if we artificially reduced the demand for commercial sex through increased penalty and public education. The price would likely fall, as the sellers are forced to compete for the business of a smaller pool of buyers. But a modest drop in the price will not deter vast majority of the sellers, because many of them do not have other, comparable means for generating income. Even pimps and traffickers have little reason to change career (investment banker maybe?) until and unless the price of commercial sex goes down quite a bit, especially if pimping is as profitable as anti-trafficking groups claim.

In other words, a decrease in demand reduces the price, but that is not likely to lead to a comparable decline in supply: in economics, this is called inelasticity of supply. And because supply is inelastic, the market must compensate that by reducing the price further in order to reach the new equilibrium at the price point at which enough of the lost demand would return, either through more buyers entering the market or existing buyers purchasing more frequently.

From the buyers’ point of view, the cost of purchasing commercial sex is not just the money they pay to the seller (be it individuals who trade sex or their pimps/traffickers). “End demand” approach increases the overall cost of buying sex by increasing the legal, financial, and social risks of arrests and/or public humiliation as well as the transaction cost (cost of finding the seller and negotiating the transaction). Assuming that each buyer is willing to incur up to a fixed amount of cost in their pursuit of sexual exchange, they will be unwilling to hand over the same amount of cash as before if non-monetary costs (risks and transaction cost) are increased.

“End demand” policies are thus unlikely to reduce the actual amount of commercial sexual exchanges, but it shifts the distribution of cost buyers incur from the direct payment toward the non-monetary costs of risks and transaction costs. It means that while buyers are incurring an equivalent level of cost overall, sellers are receiving less of it for each transaction. To put it differently, sellers must engage in more transactions than before in order to maintain the same level of income, which pimps and traffickers are sure to insist–and even then, it becomes more and more difficult as other sellers also try to sustain their profitability, further driving down the price through competition.

In addition, “end demand” policies will have two other consequences for the sellers beyond the loss of income, both of which are harmful to the people who either consensually or unconsensually engage in the sex trade. First, they lower the seller’s bargaining power, which is the ability of each side of the transaction to “take the business elsewhere.” When the number of buyers decreases, it leaves sellers with a smaller number of potential buyers to negotiate with, and buyers with a larger number of potential sellers. In a market environment like this, buyers can easily find other potential sellers who might agree to a more beneficial (to the buyer) deal, they have a greater bargaining power that they can take advantage of. Sellers on the other hand cannot afford to lose the business by insisting on a favorable deal, and are pushed into arrangements that are less safe or comfortable, such as engaging in unprotected sex or performing acts they consider degrading.

Second, “end demand” policies change the profile of buyers in the market. Because not all potential buyers assign equal values to the increased risks of arrest and its various consequences or potential loss of reputation, “end demand” policies do not discourage all potential buyers equally: they discourage buyers who are generally more afraid of the risks (or risk-averse), while doing little to deter those who are impulsive and thrill-seeking (or risk-seeking). It seems reasonable to assume that members of the latter group are more interested in having unprotected sex and more likely to assault the person engaging in the sex trade than do those in the former group who are afraid of potential health, legal, and physical risks.

If I were an academic economist, I could not get away with hypothesizing the potential consequences of “end demand” approach, as I am doing now, without testing it against the actual data. But I am not an economist and I am concerned that proponents of “end demand” approach never even address what might happen when the demand actually begins to fall as a result of the policies they advocate: they seem to be operating under a vague sense that reducing demand means less prostitution and therefore less sex trafficking. I might not have an econometric proof of my model, but they do not even have a model that is worth testing.

It is this complete lack of concern and care for the well-being of the people they are ostensibly trying to protect that frustrates me. From where I stand, “end demand” is bad for all sex workers and others who are consensually engaging in the sex trade, and probably for most people who are forced and/or coerced into the trade as well, possibly even worse (as they are under greater pressure to maintain the same level of revenue after the market crashes). We must demand politicians, celebrities and anti-trafficking organizations that promote “end demand” approach to explain what they are hoping to accomplish and how these policies actually bring about desired changes.

This past week, someone from a national organization working to end violence against women contacted me and asked for my view about addressing the problem of sex trafficking on Craigslist. The inquiry is related to the Coalition Against Trafficking in Women’s planned protest at the headquarters of Craigslist, which is calling for Craigslist to prohibit classified ads for adult services. Below is an excerpt from my response.

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I think I already wrote my basic thoughts about this topic in the previous email, but here are some details:

1. Craigslist is not the problem. It appears to be doing whatever it can do to fight trafficking on its site, such as

- requiring confirmation by phone before an ad is posted–this ensures that whoever posted the ad can be tracked down if needed
- requiring payment by credit card, which provides further mechanism to track down
- manually reviewing every single ad that is posted for signs of trafficking or child sexual exploitation
- providing a directory of agencies to report suspected trafficking to
- cooperating with the law enforcement, providing them with tools and information needed for conducting investigations

2. There are many alternatives to Craigslist where sex workers and their pimps/managers/traffickers can advertise. Because Craigslist is a company that does business with the general public, it is in their best interest to work with non-profit organizations and law enforcement to combat trafficking in order to protect its public image. Operators of websites that specifically cater to the sex industry do not have the same incentive.

3. Adult service ads are a big part of Craigslist’s bottom line, as they are to alternative weeklies and other traditional media. But they do not necessarily depend on human trafficking. There is no evidence that human trafficking is a substantial problem at Craigslist, or any more of a problem than in any other media outlets (and Craigslist does more to address the problem of trafficking than any other classified services).

4. Many women use Craigslist to advertise their services because it is a relatively safe and cheap way to do so without a pimp, management, or large start-up cost (e.g. advertising in alternative newspapers). Cracking down on Craigslist harms many of these women by taking away opportunities for economic self-sufficiency and autonomy.

5. I did a LexisNexis research for reports about trafficking on Craigslist, and I found that vast majority of examples involved minors being recruited into prostitution. I’m trying to figure out how these pimps got caught, because that might give us an idea about how to identify sexual exploitation of minors, but there isn’t enough information in most newspaper articles.

That said, some incidences were uncovered because the ads hinted at trafficking (e.g. an ad offering “sex slave” for sale–which should never have passed Craigslist’s manual review and should have been reported immediately); while some others appear to have been intervened because the girl pictured in the ad looked too young.

I think that we should work with Craigslist to improve mechanisms to identify ads that share characteristics similar to other ads that have been identified as involving child sexual exploitation or trafficking. Craigslist is a technology company, and I’m sure that they can do better in this regard, utilising data mining technologies to distinguish between a woman posting an ad for herself or someone posting an ad on her behalf with her consent, versus someone forcing her to work. (Other industries such as banking and airlines use similar technologies to identify potentially fraudulent financial transactions or suspected terrorist activities.)

6. I also would like Craigslist to cooperate with projects such as Portland Bad Date Line, with which I am tangentially involved. Portland Bad Date Line collects reports about “bad dates,” that are johns who act violently or abusively, or announcing being HIV+ after insisting on and having unprotected sex, or pimps who chase the women in an effort to get the women to work for them, etc. and distribute this information to women (and others) working in the sex industry so that they can take further precautions.

Craigslist could post this sort of information for each region prominently in adult services section, which would provide information women can use to be safer while working, while at the same time warning potential “bad dates” that their information would be shared if they act out. Craigslist should also post information for women seeking help more prominently, although it is questionable whether or not women who are trafficked would actually see the site.

Let’s get Craigslist involved. I have other ideas that I want to bring up with Craigslist if we can get their ears.

7. I feel that what I’ve written above makes sense, and it is the rational and sensible approach to addressing the problem of trafficking. But I do not feel that many U.S.-based “anti-trafficking” groups are serious: they are simply using it as a cover to attack prostitution and the sex industry, and have little regard for how their actions might impact the people they are claiming to protect.

Case in point: the campaign to “end the demand” is absurd. Economics 101 suggests that if the demand for sexual services were to decrease, it would push the price of such services down. But supply is downwardly inelastic, since many women work in the sex industry because they do not have other viable economic opportunities, and the price has to go down quite a bit before another option–such as working as janitors and maids–become more viable compared to prostitution. That is, supply will not go down as much as demand does, and the end result is that more workers would be competing for fewer johns. It would not only mean less income for the women and their families, but it would also force women to make more risky choices–such as having unprotected sex.

Further, not all johns are equally predatory or unsafe to the women. Campaign to “end the demand” would mostly drive away johns who are risk-averse (i.e. those who do not like to take risks), while it would not affect thrill-seeking, risk-insensitive johns. But these thrill-seeking, risk-insensitive types are the ones that present more health and physical risks to those working in the sex industry. In other words, such campaign directly and indirectly harm the women working in the sex industry.

Here, the intentional conflation of trafficking and prostitution by the U.S. “anti-trafficking” movement constitutes a real problem: trafficking involves force, deception, or threats, which should be immediately intervened and victims rescued; advocating for the women working in the sex industry requires a much more nuanced and multi-faceted approach (such as creating viable economic opportunities and promoting economic and social justice). The campaigns to “end the demand” or to shut down Craigslist’s adult services section are most likely ineffective at actually addressing the issue of trafficking, and extremely harmful to the women who are working in the sex industry. And yet, by conflating the two, the U.S. “anti-trafficking” movement hijacks the discourse surrounding the sex industry, making it difficult for those of us working to advocate for women who are working in it.

Another example of irrationality: reports after reports claim that the average age of entry into prostitution is around age 13, usually citing Department of Justice or FBI as the source. If average is 13, that would suggest that there are equal number of 6-year olds and 20-year olds entering prostitution (assuming normal distribution), and that is obviously untrue. It is shocking to encounter someone who had become involved in prostitution at age 13 or younger, but this is definitely an exception, not the norm.

The “statistics” actually comes from a survey of minors who had an encounter with social services, and as such does not include any adults. If you only study minors who are in prostitution, of course the average age of entry is below 18–but it has nothing to do with the average age of entry in general. Consider this: if you only studied people who died as a minor, the average age of death would be something like 13–but that doesn’t mean that the average life expectancy is 13.

So is 13 the typical age of entry for those who became involved in prostitution as a minor? The answer is no. Because the research cuts off at age 18, someone who started at 13 has five times more chance to be included in the study compared to someone who barely started at 17, making the early starters five times more represented in the study. I don’t have access to the original data sets to figure out the actual average, but I suspect that it is closer to 17–and this is only the average for those who were involved as a minor.

The truth is that none of us know the actual average age of entry, but I feel that the U.S. “anti-trafficking” movement is cynically publicising the demonstrably false claim (“the average age of entry is 13″) in order to equate prostitution with trafficking of minors, distorting the public perception of the issue and harming many women who are impacted by the anti-prostitution measures they promote.

I would also add a historical observation: in the past, the U.S. “anti-trafficking” movement have come and gone along with the anti-immigration sentiment in the nation, as exemplified by the “white slavery” panic that coincided with the historical period between Chinese Exclusion Act and Alien and Sedition Acts. The “white slavery” panic did not improve lives of women (including many immigrant women) who were working in the sex industry, but instead functioned as a springboard for repressive policies that target marginalized communities. I fear that the current “anti-trafficking” fervour, coinciding perfectly with the heightened anti-immigration sentiment, is moving along the similar trajectory, and I hope that we can redirect the movement so that it can actually offer safety and freedom for victims without causing harms on others.