Oct. 20, 2009 — -- What do prostitutes and a department store Santa Clauses have in common?
If sex acts were stocks, which ones would yield history's biggest gains and losses?
And as patrons of the world's oldest profession, have men become the unlikely beneficiaries of the feminist movement? Or are prostitutes becoming shrewd entrepreneurs in the midst of a volatile financial market?
These are just some of the provocative questions swirling through the minds of economist Steven Levitt and journalist Stephen Dubner. In their first book, "Freakonomics," they managed to spin dense, dry data into best-selling cocktail party fodder by using crack dealers, sumo wrestlers and baby names to explain what people want and how things work under the law of unintended consequences.
"I have a theory that the reason crime went down in the 1990s was that we legalized abortion in the 1970s," Dubner told ABC News in an interview alongside his co-author earlier this month. "We didn't make a lot of friends with that particular hypothesis."
And with the release of their follow-up, "SuperFreakonomics," they won't make a lot of friends among feminists or moralists, as they use cold, hard data to upset conventional wisdom. And they start by igniting a firestorm of controversy in the first chapter.
CLICK HERE to read an excerpt from "SuperFreakonomics."
Dubner and Levitt argue first, that the feminist movement has been bad for schoolchildren, as schools have been hurt by the "brain drain" of talented women leaving teaching for more lucrative careers. And they then argue that in some ways this has been very good for high-end prostitutes.
"Prostitution is one of the few -- if not the only -- sector of the labor force that's dominated by women, and always has been. And that arises from the very simple fact that, you know, there are a lot of men who want to have a lot of sex more than they are able to get for free," said Dubner.
Before World War II, if a young man wanted sex, he had two basic options: marriage or a brothel. So in the 1930s, one in five American men lost his virginity to a prostitute.
A profitable sector for hookers -- until the sexual liberation movement in the 1960s changed the business of intimacy, and a generation of "free love" altered the marketplace forever. The modesty traditionally displayed by women in search of Mr. Right evolved to a bold pursuit of Mr. Right Now. And an era of casual sex -- prostitution's direct rival -- was conceived.
"The reason the relative price has fallen so much is because there is competition from women who will have sex for free," said Dubner.
Business of Being a High-End Prostitute
A boon for men but only temporarily. For as social morales shifted and new trends of sexual tastes emerged, so too did the taboos. Prostitutes quickly recognized the business opportunities in braving this new world.
"In simple economics -- the kinds of acts that prostitutes do today, it's not conventional sex. I mean, it is the kinds of things you can't get from your girlfriend. So the most depraved things are, you know, are recorded in their day than you could, that you could ever imagine," said Dubner.
Morals may have changed, but only to a point. Prostitution is still illegal in most of America, but the law of the land is less powerful than the law of supply and demand.
And there is perhaps no student more attentive to this fact, and glad for it, than a call girl named "Allie" who asked to be included in Dubner and Levitt's research.
"She is a very bright woman. She understands the economics pretty well," said Dubner. "She said, 'Thank God prostitution is illegal,' 'cause if it weren't, I wouldn't be making $500 an hour; I'd be offered maybe $100 an hour, and I wouldn't be a prostitute. I would probably be back doing what I was doing -- which was working as a computer technician for a Fortune 50 company.'"
But Allie had ambitions of working for a different Fortune-listed company -- her own. Adapting business concepts of low overhead, market value and the technological expansiveness of the Internet, she used her bedroom as an office and took a high-heeled first step into the world of high-end escorts.
"I originally thought it would be thrilling to try once," Allie told ABC News in an interview. And it wasn't. It wasn't as glamorous as I thought. But it wasn't awful. And the guy was very nice. I walked away from it thinking, "That wasn't so bad. I was probably better than a lot of my online dating situations and now I have a car payment paid."
For Allie, it was a case of simple mathematics.
"It just became really hard to sit at a computer and program for 40, 50, 60 hours a week for the exact same amount of money I would get going to the Four Seasons for three hours and have a bottle of champagne and, you know, in the company of a gentleman," said Allie.
Allie is a direct beneficiary of all those women who marched for equal rights, as Dubner and Levitt see it. Access to a military education made her a savvy businesswoman. Liberation gave her the freedom to use her body as she sees fit.
But it was Allie's natural business acumen that impressed Dubner and Levitt.
"I had been talking a lot with businesses, trying to help businesses to be more profitable. And I was asking Allie the same sorts of questions. And she was giving great answers -- better than many of the CEOs that I interact with," said Levitt.
Allie's approach to safeguarding her protection during client meetings was especially memorable to Levitt.
Prostitution: A Better Track?
"She came up with this brilliant idea," said Levitt. "She calls customers at their work, before she'll ever meet them. And, ostensibly, she calls them just to tell them how much she is looking forward to their date that night. But really what she is telling them is, 'I know where you work. And if anything goes wrong, I am gonna call you there.'
"And it turns out to be an incredibly simple fix, a way of letting the customer know that if anything goes wrong, there is gonna be big trouble, uh, but doing it in such a nice way that no one could possibly be offended."
It seems that even a call girl can teach an economist a new trick.
"When I think about well, how economics works in the world and how you use information to your own advantage -- that is one of the most brilliant fixes I have ever heard," said Levitt.
But vetting clients in advance isn't always fail-proof.
"There were several times I, you know, had to ask someone to leave," said Allie. "You're, of course, in a vulnerable situation. I'd never been hurt, thank goodness, but you know, someone shows up at your door and they're not kind."
Allie knows that there is a price to pay for prostitution. Society's judgment is something women in the sex industry will have to negotiate for themselves. Dubner and Levitt are also aware that their professional respect for Allie's business aptitude is, in its own way, controversial.
"I think one of the broader implications of this working on prostitution and -- and knowing that women will cross over from being, you know, working in McDonald's to being prostitutes -- is people say, 'Well, these women are exploited, you know, and, and it's a terrible thing,' said Levitt. "But if you took these women -- their opportunities away from being prostitutes -- will they be better off? They are choosing to be prostitutes because they think it's better, a better track than the other thing to have."
For this economist, however, the unquantifiable nuances of morality seem to factor out of the equation.
"I think that -- you know, and having studied this -- that the, the question that comes to my mind always, it's not, 'Why would a woman go and be a high-end prostitute?' but just the opposite: 'Why are there so few women who are out there being high-end prostitutes?" said Levitt.
It's a question Allie has considered, even as she wonders what advice she would give if she had a daughter.
"I thought about this a hundred times," she said. "And, this goes back to this whole morality thing. I feel like if I had a daughter, I would want her to be in charge of her own sexuality. Her own. No matter what it is that she decides to with it. But if I had a daughter, I would hope that I could give her, you know, all the skills in the world that she would have so many different opportunities that this would just be one of many, many that would give her all the same wonderful things out of life."
After 10 years as a call girl, Allie is making another choice. She quit the business and went back to school to study something that would give her all the skills in the world.
"Economics, of course," she said.