Sex workers and the cost of safe sex: the compensating differential for condom use among Calcutta prostitutes

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Abstract

Anecdotal evidence suggests that sex workers who use condoms face large income losses because clients have a preference for condom-free sex. This has important implications for AIDS policy. We estimate the compensating differential for condom use employing data from a random sample of sex workers in Calcutta. We rely on a natural experiment—the nonsystematic placement of sex workers in a safe sex information program—to identify the relationship between condom use and the price for sex. We find that sex workers who always use condoms face large losses of between 66% (FIML) and 79% (IV).

Introduction

There have been few epidemics in the last century which have affected living standards as severely in the developing world as the HIV–AIDS crisis and, while the prevalence of HIV–AIDS in Asia is low in comparison to Africa, new evidence seems to demonstrate that the focus of new infections is shifting east (Hwang, 2001). The most recent data indicate that about 4 million people are infected in India, which is more than any other country except South Africa (UNAIDS, 2002). As in Africa, over 76% of detected HIV infections in India are caused by heterosexual sex. Epidemiological analyses reveal that HIV has been rapidly spreading from individuals practicing high-risk behavior to the general population (NACO, 1999), and India's National AIDS Control Organization (NACO) identifies commercial sex workers as one of the most important of these high-risk groups. They act as points of entry for the epidemic into the population by infecting men who then pass on the disease to their wives and other sexual partners. Sex workers in India have a high risk of infection not just because of their large number of sex partners, but also because of the high prevalence of other sexually transmitted diseases among them which further increase the risk of HIV transmission. Consequently, several HIV–AIDS interventions in India have been targeted at the commercial sex industry (NACO, 1999).

Given that the disease has no effective vaccine or cure, and that sex work plays a central role in its growth, promoting the use of condoms and other safe sex practices among sex workers is considered perhaps the most effective method of preventing the spread of the epidemic UNAIDS, 2002, World Bank, 1997. Condom use not only directly prevents HIV infection, but also protects users from other sexually transmitted diseases which reduces the secondary increase in HIV-risk caused by STDs (UNAIDS, 2002). In India as in many developing countries, however, the propagation of condom use is difficult because men have a strong preference against using them. One indicator of this is that, despite many decades of extensive government-sponsored “family planning” campaigns promoting their use, condoms have not become a commonly used method of contraception. Data from a nationally representative sample show, for instance, that only 7% of married couples use condoms, with female sterilization being the most widely used method of contraception (27%), followed by abstinence and other traditional methods (20%).1 This inherent preference against condoms is compounded by a lack of awareness about HIV–AIDS and safe sex practices among sex workers (Bhave et al., 1995) and in the general population.2

Consequently, sex workers who want to practice safe sex face losing a considerable amount of money by doing so. Bhave et al. (1995) in a study of Bombay sex workers present anecdotal evidence showing that the fear of a loss in income is one of the most important factors deterring sex workers from using condoms, even after they are made aware of HIV–AIDS and the role that condoms play in preventing it. There are, however, no good quantitative estimates of the size of this compensating differential for safe sex which is a potentially important problem in formulating effective AIDS prevention strategies. If the compensating differential is large, it would suggest that HIV–AIDS interventions among sex workers may need to find ways of devising incentives to counter the possibility of lowered earnings while actively educating clients and sex workers about the dangers of not using condoms. Therefore, underestimating the size of the compensating differential could adversely impact our ability to prevent the transmission of the disease. Despite the importance of the topic, the literature on the economics of “the world's oldest profession” is very sparse. Ahlburg and Jensen (1998), in a summary of the literature on the commercial sex industry and its implications for HIV–AIDS prevention policies, show that there is a total absence of econometric work on prostitution. The primary reason for this is the extreme difficulty in gathering reliable data on sex workers since the profession is practiced either illegally or, as in the case of Calcutta—the focus of our paper—on the fringes of legality.

There is, however, a growing economics literature on the AIDS epidemic which has dealt with it from different angles. The earliest work using an economic perspective is by Philipson and Posner (1995), who attempt to look broadly at what rational choice analysis could say about the progression of the epidemic and about what the most effective policy responses could be. Some further theoretical work by economists argues that the disease may be self-limiting. Kremer (1996), for instance, examines AIDS transmission in a dynamic model and shows that the prevalence of AIDS would lead people with low levels of sexual activity to be less active. On the other hand, it may lead high activity people to become “fatalistic” and thus either reduce their activity only slightly or even increase it. In a mixed population with high and low activity people, this creates a positive feedback by reducing the number of available risk partners—resulting in higher risks of infection for high activity people and low levels of risk for low activity people.3 This self-limiting pattern would perhaps make sense in a context where the majority of risk is borne by a small closed population where AIDS awareness is high. In India, where AIDS awareness is low and testing procedures are expensive and difficult to access, sexual behaviors are less likely to be responsive very quickly in a self-limiting manner. Once AIDS awareness spreads, it is possible that self-limiting mechanisms could come into play, but in the process, the epidemic could have unsheathed unprecedented devastation—as we know from the African experience.

In this paper, we study the incentives faced by sex workers—focussing on estimating the compensating differential for condom use with a unique data set of a random sample of commercial sex workers from the red-light area of Sonagachi in Calcutta surveyed in 1993. They were the focus of a program promoting the health of sex workers and safe sex practices that was initiated in 1992 by the All India Institute of Hygiene and Public Health in collaboration with various other organizations. We exploit the relatively random nature of selection into this program to identify the relationship between the price of sex work and condom use and thus estimate the compensating differential for safe sex. This instrument allows us to eliminate a serious source of bias common to estimates of compensating wage differentials—simultaneity and unobserved productivity Garen, 1988, Hwang et al., 1992. We find that, after correcting for this bias, sex workers face between a 66% and a 79% loss in the average prices they charge by using condoms, depending upon the estimation procedure employed. This strong disincentive against practicing safe sex practices can have a substantial adverse impact in preventing the spread of HIV–AIDS.

The paper therefore makes a contribution to three different literatures. Its main contribution is to the economics of health in developing countries, and in particular to empirical studies of HIV–AIDS, but it also contributes to labor economics in two different ways. First, it conducts one of the first econometric analyses of a major occupation—sex work—that has up to now only received theoretical attention from economists (Edlund and Korn, 2002). Second, it adds to the literature on compensating wage differentials by using a natural experiment to eliminate the problems with unobserved heterogeneity that plague studies of compensating differentials.

Section snippets

Theory and estimation strategy

One can think of prices for sex work as being determined by a hedonic function relating the price to a set of characteristics.P=P(X,C)where P denotes the price per sex act charged by the sex worker, X is a vector of attributes of the sex worker, and C is a variable denoted whether the sex worker practices safe sex, specifically whether her clients always use condoms.

As in any implicit market. this function is determined by both demand and supply factors. Estimates of the impact of any

Data and results

As explained above, the data for this analysis are from a random sample of 608 sex workers in Sonagachi from a survey conducted in 1993. The sex workers were surveyed by a team of social workers under the supervision of the All India Institute of Hygiene and Public Health (AIIH&PH). AIIH&PH had a presence in Sonagachi for more than a year at the time of the survey, providing free medical care, and were therefore, by all accounts, able to establish excellent rapport with the sex workers

Conclusion

To summarize the main findings in this paper, we have attempted to estimate the compensating differential for condom use for a sample of sex workers in Calcutta from 1993. An intervention program was instituted in 1992 which brought sex workers into contact with peer educators who instructed them about AIDS and safe sex practices, and was administered in a nonsystematic manner. By 1993, 53% of the sex workers had come into contact with a peer educator. We attempt to exploit the nonsystematic

Acknowledgements

We thank Andrew Foster, Andrew Morrison, Anna Paulson, Richard Skolnik, seminar participants at Brown University and the World Bank, and two anonymous referees for the valuable suggestions. Rao is indebted to the Mellon Foundation and the Population Studies and Training Center at Brown University for the financial support. We are grateful to the All India All India Institute of Hygeine and Public Health for sharing their confidential, proprietal survey data on sex workers in Sonagachi. The

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