Stephen J. Dubner of Freakonomics makes the case for a national Sex Tax, which seems to be a re-hashing of a 1996 article by Stephen Landsburg of Slate.com. They’re both right, and they’re both wrong.
Dubner’s proposal goes thusly:
Whereby:
+ It has been observed that Democrats are generally in favor of taxation and Republicans are generally opposed to unnecessary sexual activity; and whereby:
+ The unintended costs of sexual activity are unacceptably high, particularly in the political arena (c.f. Messrs. Clinton, Foley, Craig, Edwards, and most recently one Mr. Levi Johnston, to name just a fraction of the available examples); and whereby:
+ The pursuit of sex is also extremely costly beyond the political realm, in terms of lost productivity, unwanted pregnancies, sexually transmitted diseases, and ruined marriages (and other committed relationships); and whereby:
+ The federal government is now, as always, in need of more money;
It is hereby proposed that a new “sex tax” shall be levied upon the citizens of these United States.
Under this proposal, the sexually infected impose costs on the rest of society. By taxing them, we can cover these costs, because the world works better when people are accountable and bear the brundt of their decisions. In this case, sex is just like smoking, where (theoretically) the additional tax on a pack of cigarettes ought to cover the increased costs that come from smoking. The goal is to create a disincentive to have risky sex.
But, like smoking, demand for sex is highly inelastic, or unresponsive to price increases. If you jack up the price of cigarettes (which are price inelastic) by, say 400%, demand might not taper off, and in some cases, the high prices lead to smuggling. That’s a whole other rat’s nest, and I’m not going there.
Dubner doesn’t specify different marginal tax rates for the host of sexual kinks and quirks out there. Imagine your local house of representatives debating the marginal tax rates for oral, vaginal and . . . other forms of sex. Taxing sex will only increase the population-wide marginal propensity to masturbate, which imposes a whole other set of costs on society.
Landsburg’s arguement approaches it from another angle: If everyone had more sex, the odds of contracting AIDS would decrease with the infusion of HIV-negative people into the pool of partners. By entering the sexual partner pool, the formerly chaste would confer a benefit upon the rest of the population by lowering the odds of encountering an infected partner. Not only do they benefit from having sex, but the fact that they lowered the odds of infection creates a positive externality, or benefit to society they themselves are not rewarded or compensated for. Instead of taxing sex to reduce the spread of disease, as in Dubner’s proposal, Landsberg argues that we lower the odds of contracting disease, and thus halt the spread of infections. The trouble, though is in getting the chaste to give up the booty, and Landsburg proposes free condoms for all. Free condoms will goad the chaste into the sexual partner pool, while preventing the infected from transmitting their disease. (I’m not convinced).
Suppose you walk into a bar and find four potential sex partners. Two are highly promiscuous; the others venture out only once a year. The promiscuous ones are, of course, more likely to be HIV-positive. That gives you a 50-50 chance of finding a relatively safe match.
But suppose all once-a-year revelers could be transformed into twice-a-year revelers. Then, on any given night, you’d run into twice as many of them. Those two promiscuous bar patrons would be outnumbered by four of their more cautious rivals. Your odds of a relatively safe match just went up from 50-50 to four out of six.
That’s why increased activity by sexual conservatives can slow down the rate of infection and reduce the prevalence of AIDS. In fact, according to Professor Michael Kremer of MIT’s economics department, the spread of AIDS in England could plausibly be retarded if everyone with fewer than about 2.25 partners per year were to take additional partners more frequently. That covers three-quarters of British heterosexuals between the ages of 18 and 45.
. . .
It is often argued that subsidized (or free) condoms have an upside and a downside: The upside is that they reduce the risk from a given encounter, and the downside is that they encourage more encounters. But it’s plausible that in reality, that’s not an upside and a downside–it’s two upsides. Without the subsidies, people don’t use enough condoms, and the sort of people who most value condoms don’t have enough sex partners.
All these problems–along with the case for subsidies–would vanish if our sexual pasts could somehow be made visible, so that future partners could reward past prudence and thereby provide appropriate incentives. Perhaps technology can ultimately make that solution feasible. (I envision the pornography of the future: “Her skirt slid to the floor and his gaze came to rest on her thigh, where the imbedded monitor read, ‘This site has been accessed 314 times.’ “) But until then, the best we can do is to make condoms inexpensive–and get rid of those subway ads.
These two approaches have similar goals in mind. Dubner wishes to reward monogamy by taxing promiscuity, which presumably will slow the spread of infection. Landsburg, on the other hand, would respond with the possibility that those with the healthiest histories of sexual encounters would be quick to partner up and take the off-ramp to Monogamy-ville, which will increase the odds of infection amongst the non-monogamous pool of sexual partners. While I’m at it, I may as well bring Malcom Gladwell’s Tipping Point into this orgy of pop-econ by arguing that eventually, almost every sexually non-monogamous person would end up infected. Monogamy would still be possible, as the Herps (herpes crowd) partners up with their kind, and so forth. Oh, wait, that’s already happening.
But Landsberg’s fantasy that:
Perhaps technology can ultimately make that solution feasible. (I envision the pornography of the future: “Her skirt slid to the floor and his gaze came to rest on her thigh, where the imbedded monitor read, ‘This site has been accessed 314 times.’ “)
. . . is plausible.
The Market for Lemons argues that eventually, all sexually non-monogamous people will assume that every potential partner has some form of infection, and thus the rational person would take precautionary measures. But increased prevention measures are different from simply decreasing the odds of contracting an STD through a larger pool of potential mates. Both accomplish the same thing.
“The Market for Lemons: Quality Uncertainty and the Market Mechanism” is a 1970 paper by the economist George Akerlof. It discusses information asymmetry, which occurs when the seller knows more about a product than the buyer.
Akerlof’s paper uses the market for used cars as an example of the problem of quality uncertainty. There are good used cars and defective used cars (”lemons”). The buyer of a car does not know beforehand whether it is a good car or a lemon. So the buyer’s best guess for a given car is that the car is of average quality; accordingly, he/she will be willing to pay for it only the price of a car of known average quality.
This means that the owner of a good used car will be unable to get a high enough price to make selling that car worthwhile. Therefore, owners of good cars will not place their cars on the used car market. The withdrawal of good cars reduces the average quality of cars on the market, causing buyers to revise downward their expectations for any given car. This, in turn, motivates the owners of moderately good cars not to sell, and so on. The result is that a market in which there is asymmetrical information with respect to quality shows characteristics similar to those described by Gresham’s Law: the bad drives out the good (although Gresham’s Law applies to a different situation).
So the Market for Lemons problem predicts that non-monogamous crowd will have to assume that every potential mate is of “average” quality and will thus take measures to prevent infection (or not). One way around this is through market signalling, where potential partners signal their healthy sexual histories to each other.
Signalling took root in the idea of asymmetric information (a deviation from perfect information), which says that in some economic transactions, inequalities in access to information upset the normal market for the exchange of goods and services. In his seminal 1973 article, Michael Spence proposed that two parties could get around the problem of asymmetric information by having one party send a signal that would reveal some piece of relevant information to the other party. That party would then interpret the signal and adjust her purchasing behaviour accordingly — usually by offering a higher price than if she had not received the signal.
I can’t imagine the handle “HIV-Free” being a particularly suave MySpace tag line, nor can I imagine a scanned copy of one’s most recent HIV test being a great email to share with someone when you’re just getting to know them. But at the least it’s effective, and it already works for “positive singles”.
The problem then, becomes one of honesty. In a world where everyone is advertising their status as “HIV-Free”, how can you be sure that there aren’t people out there engaging in false advertising? Some people might forge their HIV exam certificate, in which case, you’d need an effective body of tort law to deal with wrongful injuries.
Screw it (pun intended). I’ll save you some reading. The Dutch have it right. Legalize it, don’t criminalize it. Tax it , roll on a dome, and make sure the documents are up to date.
And keep the creepy economists out of your pants.
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