The Economics of Sex: Beyond Supply and Demand

This piece was cowritten with Nathan Goodman and originally published at studentsforliberty.org.

In a recent piece at the SFL blog, Gannon LeBlanc and Bjarna O’Brien attempt to explain the economics of sex and dating with particular focus on the clichéd question, “Where have all the good men gone?” However, their analysis is riddled with problems.

Perhaps the most glaring issue in the piece is the use of women to represent the supply curve in the market for sex and the portrayal of men as providing demand. This premise reduces women’s bodies to objects that they sell in exchange for nice dinners, financial security, or relationship stability. The oversimplification of the “sex market” as basic supply and demand is also a bad economic premise. This model reduces all women and all men to two homogeneous groups, ignoring varying sexual or relationship preferences and levels of attractiveness. In the real world, both women and men demand and supply sex as independent agents — the relationship goes beyond producer and consumer.

Marina Adshade, an economist linked to in LeBlanc and O’Brien’s post, rejects the over-simplified supply and demand model, arguing that the market for sex and dating “is better described as a barter economy — an economy in which there is no money to simplify transactions.” Dr. Adshade explains that this distinction “goes a long way to explaining why it can take a long time for people to find a partner they like. It’s not because women are setting their price too high; it is simply because these barter economies are horribly inefficient.” In a barter economy, participants need to find a “double coincidence of wants”: in this case, a partner that suits their desires and also desires them. This inefficiency explains why women might wonder “where all the good men have gone,” without using the oversimplified assumptions and unrealistic homogenization of human beings that plague LeBlanc and O’Brien’s explanation.

The barter economy analysis also points to a realistic libertarian solution in a way that the supply and demand oversimplification does not. If women were to create more “good men” by raising the “price of sex,” they would need to recreate the cartel that LeBlanc and O’Brien allege has broken down. But this solution is plagued by what economists call cartel instability. In a cartel, there is an incentive to defect and charge below the price set by the cartel.  In this example, the agreement between women was a high price of sex, but women who defect could have a lot more sex. Cartel instability renders the suggested solution implausible. The only feasible way to preserve the cartel is through coercion or bullying to prevent defection.
On the other hand, if the problem is that dating is an inefficient barter economy in which the right double coincidence of wants is hard to find, individuals are already developing market solutions. Dating sites substantially reduce the transaction costs associated with the search for a compatible partner. From Match.com to Tinder to OkCupid, dating sites allow people to easily and efficiently search for a relationship that satisfies their current needs. Markets and innovation can lower transaction costs, making the “good men” much easier to find.

Another major problem with the argument is that it smuggles a controversial normative assumption into its positive economic analysis without ever justifying it. This assumption is that being a “good man” entails paying a “high price” for sex, presumably by settling down and supporting a woman. This seems an odd way to define “good,” and is mired in socially conservative assumptions about ideal relationships. One odd implication of this assumption is that the best men are those who hire the most expensive prostitutes.  Furthermore, men desire having other traits ascribed to “good men” (e.g., intelligence) for countless reasons unrelated to sex.

The assumption that fewer “good men” exist today than in the past could easily come from frustration with dating’s inefficient barter economy coupled with what Bryan Caplan calls pessimistic bias (while Caplan only discusses the pessimistic bias in terms of traditional economic subjects, it isn’t unreasonable to think it might extend to other facets of life). There are good reasons to think that men have become better, not worse, at least in some key ways. Statistics suggest that rape rates have declined dramatically. Rates of domestic violence have also decreased. Perhaps good men are more common now than ever.

LeBlanc and O’Brien’s analysis is based on false assumptions. Applying economics to understand dating can be illuminating. But one must appreciate the nuance and diversity of real relationships and real preferences, in a way that their piece failed to. This is the key difference between good and bad economics: the former is careful and explicit about its assumptions, whereas the latter makes sweeping generalizations. By understanding relationships as a barter economy and freeing oneself from poor normative judgments, the economics of sex start to make sense and can be applied in a productive and fair way.

http://studentsforliberty.org/blog/2014/08/04/the-economics-of-sex-beyond-supply-and-demand/

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s