Bar Econ 101 Thailand Pricing Model
The choice for many sex travelers to Thailand is simple; sex is cheap and easily available. Generally speaking, sex tourists are pretty bad at math. Since the trip might cost around $3,000 for flights, hotel and food, with the current savings of $140 per girl, you have to sleep with at least 21 women to break even. Ignoring the consumer's cost for sex, how expensive is Thailand's actual sex industry? Are bargirls overpriced compared to the rest of the world?
To figure this out we need to compare what a service provider earns verse the relative earnings around the world. Although this is not completely accurate, I have made some assumptions to keep it simple:
- I based all the prices on a major city.
- In western countries I assume that approximately half of the hourly rate goes towards the agency / driver / brothel since being an independent relates more to street walkers.
- For countries that use the barfine system, I assume that all of the money goes to the girl as the barfine works as the agency fee.
- People working on minimum wage cannot usually partake on paid sex; therefore a sex worker's income is relative to that as a non-skilled professional (i.e. not a doctor's or lawyer's salary).
- A non-skilled professional's salary in a major city of any country is based on 3x the national average income.
- I'm ignoring all income tax as a reduction of earnings.
- Income and rates based on local currency.
- Rates are based on a per hour session or “short time”.
For example, let's say that the average hourly earning is $25 / hour for a working professional and the average hour rate for a girl is $100. This would mean that a sex workers relative pay is 4 times more than another profession, or as I will show in my chart 4.0.
Here is a global sample for common sex areas:
|City||SW rate*||Relative Pay|
|Havana||40||144.3 (not a typo)|
* rates are girl's take home after agency fees
** New Zealand's small wage discrepancy between urban and rural areas exaggerates Auckland's average wage based on this model by approximately 30%.
Based on this sample of 10 cities, we can see that in actual fact Thailand is the most expensive city when it comes to sex workers. Although Cuba strikes an amazing rate, you have to understand that a woman found even talking to a foreigner in the street can get her harassed by the police and therefore the risks for them can be extreme.
In places such as Canada and England where prostitution is illegal, however common, the rates seem fairly realistic to the sigma that goes with the profession, and to the fact that women see an older, overweight male in a Western country differently than in an Asian country.
To my surprise, I did not expect Thailand to actually score as high as it did. The laws of economics do not seem to apply here. Although there is a large demand for sex tourism in Thailand, there is also an overwhelming supply. How many bars would a person walk in to where the ratio of women far outnumbers the number of potential customers?
While some studies put the amount of workers in the millions, the World Health Organization and other NGOs put the amount between 150,000 – 300,000 workers, which encompasses both registered and non-registered workers.
As for supply, it is estimated that between 75 – 95% of Thai males have visited a prostitute at some point in their life, however since there is such a large wealth discrepancy it is hard to imagine that their visits would be anything but rare. One study showed that every day over 4 million Thai men pay for sex, which must be grossly glorified, as there is no way the supply could keep up with such demand (that would require a girl to see 20 men a day, every day).
Based on 2002 estimates, about 4.5 million sex tourists visited Thailand. Even with an educated guess that the average tourist had sex with 10 women during their visit (which from past comments seems to be a high “average”), then the average girl is only having sex with a tourist about 4 times a week. By adding a realistic figure to the amount of Thai men partaking in the sex industry we see that there is a large gap between how many men a Thailand sex worker would see in a week compared to a country such as South Africa where the average sex worker sees 14.4 clients per week, or in Nigeria where the weekly average is above 30 men.
In the Thailand sex industry the laws of supply and demand do not seem to exist. No matter what the price is for sex in Thailand, odds are that it will not greatly affect the number of sex tourists to the country. It is an inelastic variable. What should affect the market price however, is the unused capacity (available girls). How many bars throughout the day have more women then men inside, and how many women go home at night without a paying customer?
Since the market is not self-regulating there must be some kind of external or underlining factor. In other countries I would put this to human trafficking. Criminal organizations view “market regulation” in a slightly different context, which is more complicated than simple microeconomics. Although trafficking does exist in Thailand, the percentage of total workers, which are trafficked, is not substantial enough (in my opinion) to change market conditions. It is estimated that only a few thousand trafficked workers are in existence.
I do not want to give the impression that I look at a sex worker and think to myself, “in current market climates, how do I get a girl to sleep with the most amount of clients in a week?” I'm not a cold person that treats women like cattle. I just find it interesting that in a country where pleasures and delights can be had for a fraction of the dollar, the reality is quite opposite. Since the industry is worth billions of dollars a year to an economy, any economists would assume that the sex industry would operate with the same characteristics as any other economy.
Is there a human factor in control here? Because we are dealing with the very emotional state of human beings, does humanity trump the mathematical rational that could accurately be applied to any other industry. My only guess is that the service price is not regulated on supply and demand, but on a baseline necessity or fixed cost. Over $300 million USD is sent to rural areas of the country from the sex industry in larger cities. That is the largest infusion of cash to the poorest parts of the country; more than any other government agency. It is therefore expected for women in the industry to send a certain amount back into the poorest parts of the economy.
This has set up the baseline on what a sex worker needs to make. In a month, a worker needs to make enough for their basic necessities, extra disposable income normal for that line of work (i.e. nicer clothes, makeup), plus enough money for the dispersion of wealth into rural areas that have no other means of obtaining it. Since this amount is irrelevant to the number of customers, when the demand goes down, the price must goes up. The complete opposite of what normal supply and demand dictates. Although this does not fluctuate on a daily basis or by an individual establishment, the standard pricing in the industry as a whole might be driven by this idea.
A common comment among clients is a scenario near the end of the night where the woman will most likely go home alone and will not budge on the price. In many occurrences the price will even go up when it seems that woman will have no clients at all. Many people will associate the woman to be greedy or assume the male is inexperienced. It just might be that she is followed this inverse pricing model that seems to affect Thailand.
When I started to write this article, I was just curious on how expensive Thai sex was relative to other professions. At no time did I think about the size of the industry and how that could affect both the customer and the girls on a larger scale. More
importantly, as the customer, you have no control over the pricing of the industry. Yes, you can sometimes underpay, and you can always over pay, however the industry standard price in not some arbitrary number that was just picked. It has a reason.
Interesting. What would make a great follow up article would be an explanation as to why the prices charged – and paid – in Bangkok are so much higher.