An economic model of paid sex: Coase’s “The Nature of the Firm,” gains from trade, and the gift economy

In Roosh’s Orgasm or Money story, he describes encountering yet another semi-pro prostitute in Latvia,* and he ends by wondering about sexual cultures around the world:

Then I thought about what she had said, how it was stupid for American girls not to ask for money before sex. Was it possible that the sexual culture in America and other Western countries is fantasy, and that the best move for women was to get as much as she could out of a guy?

It’s possible that getting “as much as she could out of a guy” in terms of money is optimal for an individual woman in some circumstances, but if she plays that game she’s likely to find guys who are unwilling to make long-term investments in her. A guy who pays for sex expects to dump the provider when he’s done: as the philosopher Charlie Sheen once supposedly said regarding prostitutes, “I don’t pay them for sex. I pay them to leave.”

But there are deeper problems than that.

Moving unpaid “labor” into the “paid” labor can have the nasty, unintended effect of monetizing a lot of activity that’s better left outside the conventional economy. Roosh is really describing is the difference between a gift economy and market economy, which Lewis Hyde describes in his eponymous book. Moving all or a great deal of sexual activity to a market economy will result in fewer people forming mutually beneficial relationships in which both reap gains from trade and specialization. Monetizing such relationships increases transaction costs for both buyers (men, usually) and sellers (women, usually), which can leave both sides worse off for transaction costs and other reasons.

Ronald Coase’s famous essay “The Nature of the Firm” (alternately, here’s Wikipedia on it) points out that firms exist to reduce friction / transaction costs that arise from alternate arrangements—like having a large number of consultants work together. When individuals are try to gain every last monetary or other advantage at the margin, they aren’t working towards the good of the whole. It’s cheaper and better for large groups of people to get lump-sum payments and then work together, to the best of their abilities, to further the total enterprise. That’s true of firms and of marriages.

A relationship can be conceptualized as a very small firm, as people continually rediscover—in “Marry Him! The case for settling for Mr. Good Enough,” Lori Gottlieb realizes that often “Marriage isn’t a passion-fest; it’s more like a partnership formed to run a very small, mundane, and often boring nonprofit business. And I mean this in a good way.” She realizes this after having a child on her own, however. Instead of figuring out that she can reap major gains from finding a decent guy and marrying him, she decides to date around and has a child via a sperm seller, only to find what should really be obvious and only isn’t to someone who’s been taught to never “compromise.”

As noted above, both parties reap gains from specialization in a firm or marriage: one person might like to cook, for example, while the other person does dishes, or runs errands, or builds stuff. Granted, this only works if both parties actually have useful skills: one time I was in a bar, listening to a nasty-sounding woman complain to two friends, one male and one female, about the guy she was divorcing, and the woman was going on about how she wouldn’t cook, or run errands, or acquiesce to any number of normal-seeming things. Finally I asked her, “What do you bring to the relationship beyond your vagina?” The guy started laughing, hard, and the other woman began chuckling, and the complaining woman didn’t know what to say, so she told me I was rude (true, although I prefer to call it “honest”) and asked how I dare ask her that sort of thing—I dare many things. But she didn’t and probably couldn’t answer the obvious question, perhaps because she already knew the answer in her heart.

The larger point contained in that anecdote, however, is that both parties gain, or should gain, from not having search for sex partners or pay for sex. In addition, long-term plans, like offspring, are easier to make.

Most of us don’t want to live in a purely market economy with every potential transaction: when our significant others come over, we don’t charge them for dinner, and, if we did, the charge would create very different expectations. Dan Ariely describes the expectation issue in Predictably Irrational and elsewhere. Once market norms, as opposed to gift-based norms, are activated, they’re very hard, and perhaps impossible, to de-activate.

Plus, to return to Coase, it’s very inefficient to price everything, and to continually think of pricing. It’s better for individuals and the economy as a whole if people trust each other and create value for each other without (always) charging for it. Relationships are, in part, a movement from market economies to gift economies, and in the process they create a lot of value, along with love, trust, and assorted other positive feelings. If there’s a large-scale culture shift away from non-paying relationships and towards women trying “to get as much as [they] can” out of guys, as Roosh describes, both sides lose, including the woman trading sex for money.

Granted, if a woman isn’t looking for long-term relationships or real help, it can make sense to move to a mercantile economy: this might be why a fair number of college girls get into stripping or even hooking, only to quit at or near graduation: they’re shifting from short-term expectations to long-term ones, and they know that violating social taboos can have a (major) economic payoff, but it’s easy enough for many of them to shift back into the “normal” relationship economy when their interests shift to long-term relationships.


* “Semi-pro” meaning someone who doesn’t explicitly advertise their wares but does eventually demand money for sex, or simply tries to drain guys through overpriced bar drinks and the like.

Links: Sibling loss, free speech, self-publishing, transfer of learning, and more

* Quora answers: “What does it feel like to have your sibling die?” HT MR.

* The Case for the Private Sector in School Reform.

* Terrifying Teen Speech in the News Again: What kind of democracy teaches its young people they’ll be punished for talking out of turn?

* The Joys and Hazards of Self-Publishing on the Web. This basically describes where I’m going.

* From Tyler Cowen, a link to “Working 9 to 12: ‘How Much Is Enough?’ by Robert Skidelsky and Edward Skidelsky:”

I well remember as recently as the 1980s how shabby England was, how terrible the plumbing, how shoddy the housing materials, how treacherously uneven the floors and sidewalks, how inadequate the heating and poor the food — and how tolerant the English were of discomfort. I recall breakfast at Hertford College, Oxford, in an imposing hall with a large broken window — apparently broken for some time — and the dons huddled sheeplike in overcoats; and in a freezing, squalid bar in the basement of the college a don in an overcoat expressing relief at being home after a year teaching in Virginia, which he had found terrifying because of America’s high crime rate, though he had not been touched by it. I remember being a guest of Brasenose College — Oxford’s wealthiest — and being envied because I had been invited to stay in the master’s guest quarters, only to find that stepping into the guest quarters was like stepping into a Surrealist painting, because the floor sloped in one direction and the two narrow beds in two other directions. I recall the English (now American) economist Ronald Coase telling me that until he visited the United States he did not know it was possible to be warm.

As I said in MR’s comments, to me, the situation may not have improved that much; as an undergrad I went from Clark University to the University of East Anglia for a semester and was shocked at the condition of the latter, and of England in general. Notice too this:

There is virtually no discussion of how people, their incomes halved, might be expected to employ the vastly greater leisure that the authors want them to have. Besides the sentence I quoted about the musician, sculptor, teacher and scientist — and the description is of their work, not of their leisure activities — there is a suggestion that a good leisure activity is letting one’s mind wander “freely and aimlessly,” and a list of three recreations — “playing football in the park, making and decorating one’s own furniture, strumming the guitar with friends” — offered to refute any contention that the authors’ conception of leisure is “narrowly highbrow.”

I like my work, most of the time, and would probably be bored being idle. We might be better off if we tried to do things we like, and, if we can’t, we should at least try to like the things that we do.

* “Low Transfer of Learning: The Glass Is Half Full,” which ends with this: “Instead of bemoaning American workers’ mediocre literacy and numeracy, we should be grateful that millions of Americans who learn little in school still manage to learn useful trades on the job. Seriously.”

A Jane Austen Education: How Six Novels Taught Me About Love, Friendship, and the Things That Really Matter — William Deresiewicz

I really like and admire A Jane Austen Education, despite agreeing with the younger Deresiewicz who the older one mocks for believing sentiments like this one, about Jane Austen’s Emma: “The story seemed to consist of nothing more than a lot of chitchat among a bunch of commonplace characters in a country village. No grand events, no great issues, and, inexplicably for a writer of romance novels, not even any passion.” Deresiewicz is setting himself up to be knocked down, and yet when I read Emma I, too, was bored by the “chitchat” among the bumpkins.

But Deresiewicz goes on to explain why his younger self was totally wrong, and how he grew as a person through closely reading Jane Austen and applying her novels to his life experience. Though his explanation is persuasive, I still don’t buy it. To me, the characters in Emma are still “a pretty unpromising bunch of people to begin with, and then all they seemed to do was sit around and talk: about who was sick, who had had a card party the night before, who had said what to whom. Mr. Woodhouse’s idea of a big time was taking a stroll around the garden.” I usually call the ceaseless chatter without any action referent “empty status games,” because the games don’t refer to anything outside their immediate social situations (granted, it might also be that I don’t usually excel in them). These sorts of situations are akin to the ones Paul Graham describes in “Why Nerds Are Unpopular:”

I think the important thing about the real world is [that. . . ] it’s very large, and the things you do have real effects. That’s what school, prison, and ladies-who-lunch all lack. The inhabitants of all those worlds are trapped in little bubbles where nothing they do can have more than a local effect. Naturally these societies degenerate into savagery. They have no function for their form to follow.

Jane Austen’s societies obviously don’t generate into savagery—unless they’ve been transformed into Pride and Prejudice and Zombies (“Now with Ultraviolent Zombie Mayhem!”)—but their inhabitants do feel “trapped in little bubbles where nothing they do can have more than a local effect,” which makes them unsatisfying, at least to my temperament. Graham might also not be an ideal person to cite, given how much he admires Austen: “Everyone admires Jane Austen. Add my name to the list. To me she seems the best novelist of all time.” Still, strike me from the list: her style is amazing and her content vapid. Consider this description, also from Deresiewicz:

One whole chapter—Isabella had just brought her family home for Christmas—consisted entirely of aimless talk, as everyone caught up on one another’s news. For more than half a dozen pages, the plot simply came to a halt. But the truth was, for long stretches of the book there really wasn’t much plot to speak of.

Or this: “What could be duller, I thought, than a bunch of long, heavy novels, by women novelists, in stilted language, on trivial subjects?” There are much duller books—Beckett’s trilogy, Molloy, Malone Dies, The Unnamable comes to mind, since those are novels written to make some philosophical statement about the meaninglessness of life or to give English professors a bone to gnaw into scholarly papers—but the point stands. I’m not opposed to “women novelists,” and anyone who is on the grounds of perceived unimportance should try The Secret History and Gone Girl, but “long, heavy novels [. . .] on trivial subjects” are tedious regardless of their author’s gender.

Moreover, I’m not alone: “As it turned out, people had been reacting to Jane Austen exactly as I had for as long as they’d been reading her. The first reviews warned that readers might find her stories ‘trifling,’ with ‘no great variety,’ ‘extremely deficient’ in imagination and ‘entirely devoid of invention,’ with ‘so little narrative’ that it was hard to even describe what they were about.” At some level, as happens with much art, a preference for Austen may come down to temperament, and to what a person believes about what The Novel or a novel should do. I’ve never been able to get into novels that don’t have some kind of narrative drive or energy—both vague terms that I could spend the rest of this essay describing, or, rather, trying to describe—and, like Lev Grossman, I think “Plot makes perverts of us all:”

A good story is a dirty secret that we all share. It’s what makes guilty pleasures so pleasurable, but it’s also what makes them so guilty. A juicy tale reeks of crass commercialism and cheap thrills. We crave such entertainments, but we despise them.

For as long as a century, however, if not longer, literary culture has been bifurcating between high-culture, non-plot types who inhabit universities and book reviews and institutions, and common readers, who like something to happen and maybe some T&A or depraved longings in their fiction, even if the language used for the T&A and depraved longings isn’t very interesting. Most of us are taught that long, tedious books written in stilted language are more valuable than those that do the opposite.

To be sure, I don’t think the people who genuinely love Austen have been academically brainwashed—I think they do authentically love her writing—but I also think the original reviewers and the younger Deresiewicz have a point too, but that point is mostly drowned in school-based settings.

At the time Deresiewicz had his Austen breakthrough, he was seeing a waitress, and they “had little in common and had never progressed beyond the sex. She was gorgeous, bisexual, impulsive, experienced, with a look that knew things and a laugh that didn’t give a damn.” Perhaps this is a function of me being in my 20s, but this arrangement doesn’t sound so bad, and, having dated the equivalent woman, I rather enjoyed those things at the time. Furthermore, I don’t think such relationships are wrong—though I would also say, obviously, that they’re not the only kind of relationships available, or the only kind a person should have over the course of their life. Sometimes people eat fast food; other times they dine in fine restaurants, or at the Cheesecake Factory, or cook for themselves, or cook with another person, or cook simple foods, or complex ones, or have potlucks. I leave it to you to map that metaphor onto sexuality and relationships, but the point about variety in relationships is useful. For Deresiewicz, “Austen taught me a new kind of moral seriousness—taught me what moral seriousness really means. It means taking responsibility for the little world, not the big one. It means taking responsibility for yourself.” But people who are always morally serious can also be dull, just as people who are never morally serious are often unintentionally cruel.

The trick is being able to distinguish the two, and to find a middle way, and to develop some self-awareness, which is hard for many if not most of us. Certainly it was hard for Deresiewicz’s younger self:

If you’re oblivious to other people, chances are pretty good that you’re going to hurt them. I knew now that if I was ever going to have any real friends—or I should say, any real friends with my friends—I’d have to do something about it. I’d have to learn to stop being a defensive, reactive, self-enclosed jerk.

On the other hand, being oblivious to other people sometimes means being very tuned into technical or other problems that need solving—for the best example of this I’ve seen in literature, consider Lawrence Waterhouse in Cryptonomicon, who is shockingly oblivious and essential to the Allied war effort and who extends cryptography. It should also be noted that he’s not intentionally mean to others, and in the novel no one is emotionally hurt by him in an obvious fashion, but the depiction of his thought process as an engineer / mathematician seems pretty accurate. You get moments like this: “In particular, the final steps of the organist’s explanation were like a falcon’s dive through layer after layer of pretense and illusion, thrilling or sickening or confusing depending on what you were. The heavens were riven open. Lawrence glimpsed choirs of angels ranking off into geometrical infinity,” perhaps in exchange for attention to other people. To what extent are dispositions trade-offs? It’s a decent question, I think, but also one I can’t really answer.

Which is the kind of thing that I’m encouraged to do; in one moment, Deresiewicz praises the kind of professor we all hope to have: “When my professor asked a question, it wasn’t because he wanted us to get or guess ‘the’ answer; it was because he hadn’t figured out an answer yet himself, and genuinely wanted to hear what we had to say.” This is what I try to do in the classroom, although I’m guessing this kind of strategy works better for humanities students than for, say, math students, when the answer or answers are well-known, at least up to a fairly high level.

There are also intellectual surprises in A Jane Austen Education, and those surprises made me realize things I didn’t before:

Popular music is one giant shout of desire, one great rallying cry for freedom and pleasure. Pop psychology sends us the same signals, and so does advertising. ‘Trust your feelings,’ we are told. ‘Listen to your heart.’ ‘If it feels good, do it.’

And if everything is pointing you in one direction, it might be time to ask what lies in the other. Literature seems to ask this question. Pop music, as Deresiewicz points out, doesn’t. In Deresiewicz’s rendition, Austen herself was reacting against her time, which is to be commended:

Austen lived in the great age of trash fiction: the gothic novel, the sentimental novel, the bodice ripper—crumbling castles, creaking doors, and secret passageways; heavenly maidens and dark seducers, piercing shrieks and floods of tears, wild rides and breathless escapes; shipwrecks, deathbeds, abductions, avowals; poverty, misery, rape, and incest.

In other words, she lived in “the great age” of all the good stuff, though I would argue that the good stuff is still with us if we know where to look—I’m pretty sure Game of Thrones has every element in the Deresiewicz list.

Some weird stylistic quirks recur in the book, like the habit of “Austen was showing me” or “Austen was saying”-style constructions (“I could grow up and finding happiness, Austen was letting me know, but only if I was willing to give up something very important” or “Austen taught me a new kind of moral seriousness—taught me what moral seriousness really means” or “Austen understood that kids are going to make mistakes, and she also understood that making mistakes is not the end of the world”). But the overall effectiveness is tremendous, and not only because I might be a major component of Deresiewicz’s target audience: self-absorbed people who secretly think they have the answers other people lack.

The power of story: Jane Austen / William Deresiewicz edition

“People’s stories are the most personal thing they have, and paying attention to those stories is just about the most important thing you can do for them.”

—William Deresiewicz, A Jane Austen Education: How Six Novels Taught Me About Love, Friendship, and the Things That Really Matter

Links: Teen sex attitudes, writing lessons, sentence origins, math, cities, tea, languages, and more

* Parents Just Don’t Understand: A sociologist says American moms and dads are in denial about their kids’ sexual lives. See also: “ Sex? Not my kid! A new book explores parental delusions about their teens’ sexuality.” Notice this: “[S]exual threats are seen [by parents] as ever present — from someone else’s sex-crazed kid, someone else’s corruptive parental influence, someone else’s perversion. Rarely do parents attribute the risk to their own child’s sexual desire or agency. Surprise, surprise.”

* The Most Important Writing Lesson I Ever Learned; unfortunately, I think most academics either never learn or forget this:

When you understand that nobody wants to read your shit, your mind becomes powerfully concentrated. You begin to understand that writing/reading is, above all, a transaction. The reader donates his time and attention, which are supremely valuable commodities. In return, you the writer, must give him something worthy of his gift to you.

* Where do sentences come from?

* “[A]lgebra isn’t harder than other subjects, it’s more objective. Therefore, it tends to make educational fraud more visible. People rarely fail algebra and succeed in other subjects; they fail in all subjects and algebra is the only one where it can’t be ignored any longer.”

* How communities are banding together to create high-speed, affordable broadband access.

* Allen Wyler’s Dead Ringer unintentionally shows the importance of creative writing classes. The novel starts: “A dark, ill-formed premonition punched Lucas McRae in the guy so hard it stole his breath.” But premonitions don’t punch people in the gut—other people do. “A second later it vanished, leaving only a lingering vague sense of foreboding.” We don’t need “lingering” and “vague” one word will do, and the phrase itself is a cliche anyway. This is the sort of stuff college sophomores discuss in “Introduction to Writing the Novel.”

* Survival Lessons From an Ancient Failed City:

Today’s sprawling cities expanded in a period of mild weather too, with no anticipation that seas might rise or energy resources could be depleted. Angkor and modern cities resemble one another in that they were built to survive in only the most benign weather regimes. The roads, sewers and the like of the modern suburb are based on an assumption of mild weather and cheap energy. Recent events like Hurricane Katrina in New Orleans and subsequent Midwestern intense storms show how poorly modern infrastructure performs in extreme weather.

* Everyone loves smut, says Patty Marks of Ellora’s Cave, who turned kinky fiction into millions before E.L. James.

* How to start an online tea business. My best guess: don’t.

* Bryan Caplan: “To understand why Americans don’t learn foreign languages, simply reverse this reasoning. We don’t learn foreign languages because foreign languages rarely helps us get good jobs, meet interesting people, or enjoy culture.” I approve of learning foreign languages and admire people who do, but I doubt the typically American derives much benefit because the typical American has to travel too far to make use of the foreign language. For most people, learning programming languages is probably far more useful in terms of both job skills and “learning how to think.” This view is close to David Henderson’s point: “Thoughts on Second Language.” Here is a counterpoint. It is possible that foreign languages would be much more useful from a very young age, but then the same could be said of Python. It’s possible that I haven’t seen foreign language benefits in my life because I haven’t learned enough of a foreign language to receive real benefits.

* You’ll never be Chinese.

Life: How the writer progresses

“If a writer is not simply going to repeat himself (which isn’t always a bad thing to do), he has to keep changing, more or less reinventing himself. He hopes that the changes are ‘developments'; that his ‘stages,’ like a rocket’s, are all pushing the same payload toward heaven, in their different ways. He hopes too—since some legs of the trip are liable to be rougher than others—that his audience will stay with him across the troll-bridges and that they’ll reach the sweet cabbage fields together. It may be that there is more troll than cabbage in these pieces; I hope not.”

—John Barth, The Friday Book

Alif the Unseen — G. Willow Wilson

Alif the Unseen almost works, but it persistently mischaracterizes technology in a distracting, false-sounding way that its eponymous hacker protagonist wouldn’t. On the first page of Alif’s narration, we find this about his phone: “Another hack had set this one up for him, bypassing the encryption installed by whatever telecom giant monopolized its patent.” But encryption algorithms are math, and math can’t be patented. Furthermore, a patent is by definition a limited monopoly right. As a result, the last part of the sentence seems incoherent. And what is being encrypted? The phone’s operating system? Its user data?

A few pages later, Alif is “watching as a readout began to scroll up the screen, tracking the IP address and usage statistics of whoever was attempting to break through his encryption software.” But reading “usage statistics” makes no sense here: Alif isn’t, say, providing blogging software or an e-commerce platform (a few pages later, he installs a keystroke logger and other software on the computer of his love interest, and says that he does so “to track her usage statistics.” This makes more sense). Someone wouldn’t “break through his encryption software;” he or she would attempt to penetrate Alif’s firewall. The same would-be intruder leaves after “executing Pony Express, a trojan Alif had hidden in what looked like an encryption glitch.” I don’t know what “an encryption glitch” means here, and I don’t think the author does either.

Alif notes that, in the Arab Spring, “the digital stratosphere became a war zone. The bloggers who used free software platforms were most vulnerable.” If anything, open-source software should be less vulnerable, because well-known open-source software systems won’t have obvious backdoors (because they’d be found) and they have the advantage of many eyes on their source code. There’s an equally jarring moment when Alif says that he’s written a piece of software in “C++. But the type system is soft of—new. I’ve made a lot of modifications.” But he probably is referring to whether it’s dynamically or statically typed—that is, checking whether a program’s internal variables and other values are computable and safe when the program is run or when it’s compiled. It isn’t clear why Alif would change C++’s type system. At another moment, Alif worries that a malevolent, governmental entity is watching him: “The Hand would see Alif using his e-mail and cloud computing accounts, but until he could crack his algorithm, Alif would appear to be working from Portugal, Hawaii, Tibet.” The phrase “crack his algorithm” is meaningless here. “Cloud computing” is the kind of term marketers use; programmers or hackers would probably say “servers.”

These kinds of persistent, distracting errors detract from the story and the novel’s realism. It might seem strange to discuss realism in a book that features Djinn, vampires, and other supernatural elements, but any writer still has a duty to get the language of the “real” or mundane world right. Wilson doesn’t, and that makes the whole novel feel fake when it shouldn’t. In The Name of the Rose, religious language and medieval thought infuse every line, even when contemporary philosophical ideas are being expressed through the language of the time. Eco knows the period like Wilson doesn’t know the language of hackers, programmers, and computer science. I’m not an expert, but I’ve read enough in the field to understand what she misses.

Still, there’s a sense of hidden knowledge that runs throughout Alif the Unseen, and a melding of old ideas with new technology. That’s an appealing idea, and so is the idea of an Arab Golden Compass. It’s got some religious elements that could come from The Name of the Rose. Much of the writing is skillful if not particularly memorable. Funny moments appear: Vikram the Vampire, on hearing one of Alif’s schemes, says, “I don’t want foreigners involved in my business. Jinn are one thing but I draw the line at Americans.” Such moments are just not common enough to merit reading this book over something better, like The Golden Compass or Gillian Flynn’s Gone Girl or Carlos Ruiz Zafon’s recent novels, all of which do language better.

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