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The European Journal of Health Economics
Published in: The European Journal of Health Economics 9/2015

01-12-2015 | Original Paper

Endogenous risk-taking and physical appearance of sex workers

Authors: Peter H. Egger, Andreas Lindenblatt

Published in: The European Journal of Health Economics | Issue 9/2015

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Abstract

Previous research found that physical appearance affects the risk-taking of sex workers through offering unprotected services. This paper utilizes a large individual-level data set covering 16,583 pay-for-sex contracts in 2011 and 2012 by 2,517 female suppliers in Germany. Results based on instrumental variables suggest that the incentive for risk-taking is about twice as high than when assuming random assignment of risk-taking.
Footnotes
1
Throughout this paper, we use the terms “risk-taking”, “unprotected sex”, and “sex without condom” interchangeably.
 
2
To some extent, the arguments in this line of research are consistent with the evidence that economic success and physical appearance are related to each other (see [9, 11, 14, 17]).
 
3
Gertler et al. [10] demonstrate in their Table 5 that the practice of unprotected sex can be explained by sex worker and client characteristics, but their price comparisons of protected and unprotected sex practices only account for endogenous selection based on time-invariant sex worker characteristics. Chang and Weng ([4], p. 482) acknowledge that their “analysis may suffer from endogeneity bias because condom use and prostitute price may be correlated due to some unobserved common factors.”
 
4
While this is only one such platform in Germany, it accounts for an annual revenue of about 4 million Euros for sexual services offered by females only.
 
5
When rescinding a concluded contract, the contracted price is still due. This can be enforced since customers must fully reveal their identity to the platform owner. Fifteen percent of the contracted price is generally due as a fee for the platform services.
 
6
Of all 16,583 individual contracts covered, weight was imputed by students into the four categories of “obese” (corresponding to a body mass index (BMI) of higher than 30), “overweight” (corresponding to a BMI of higher than 25 and up to 30), “normal weight” (corresponding to a BMI of higher than 18.5 and up to 25), “underweight” (corresponding to a BMI of up to 18.5) for 11,630 transactions. In order to avoid a measurement error to the largest possible extent, this categorization was done twice, by different students. Notice that subjective classification schemes of sex workers’ appearances had also been used in other studies [e.g., 7, 10, 18].
 
7
Clearly, all of the information contained in the online postings is self-reported. Hence, sex workers might strategically misreport (see Plankey et al. [19] and Cawley [3] for a general discussion of misreporting). However, the contracts are concluded based on this provided information and they become legally effective. Moreover, most sex workers are rated by earlier customers, and misreporting would show in the ratings. The ratings do not indicate strategic misreporting on average.
 
8
The correlation of the disturbances between latent process of the probability of risk-taking and the outcome (wage) equation is negative. Hence, the downward bias of the OLS parameter on risk-taking suggests that risk-taking sex workers have on average lower gains from risk-taking than non-risk-taking ones.
 
9
The other model results are available from the authors upon request. Notice that further test statistics suggest that the instruments do not under-identify and are now weak. Yet, as with the other test statistics, these are biased with limited dependent endogenous right-hand-side variables.
 
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Metadata
Title
Endogenous risk-taking and physical appearance of sex workers
Authors
Peter H. Egger
Andreas Lindenblatt
Publication date
01-12-2015
Publisher
Springer Berlin Heidelberg
Published in
The European Journal of Health Economics / Issue 9/2015
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-014-0640-2

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