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Dear Economist: Should I take Lehman’s collapse lying down?
October 4, 2008
I work as an escort in Canary Wharf. I wonder if you might have some sound business advice on how workers in my industry should tackle the sudden drop in demand following the collapse of Lehman Brothers?
Miss C
Dear Miss C,
I wasn’t aware that escort services were pro-cyclical, but I shall take your word for it. You have three options, none of them perfect.
One: relocate. Canary Wharf is a pure banking play, and you could seek a more diversified market. The West End is full of hedge funds, oil barons and old money. However, I recognise that it will take some effort to find new clients. The economist Steve Levitt and sociologist Sudhir Venkatesh discovered, in a recent analysis of Chicago street prostitution, that the industry was very concentrated because prostitutes and clients would otherwise fail to find each other. You, of course, are not in quite the same game and may be able to relocate with ease.
Two: tough it out at Canary Wharf and hope that supply falls to match demand. Levitt and Venkatesh found that the supply of street prostitution was highly elastic in response to a demand surge. (The fourth of July holiday provokes a spike in trade for prostitutes – who knew?) Existing prostitutes would work longer hours, other prostitutes would travel to the area, and women who didn’t normally work as prostitutes at all would dabble in the business. This suggests that many of your rivals will find something else to do in the tough times.
Three: you may find that escort services are a little like estate agency, in that even severe demand shocks don’t tend to reduce fees. You’d find yourself well paid when in work, but frequently idle. That spare time could be used to study or find a part-time sideline.
I would give exactly the same advice to an estate agent.
Questions to economist@ft.com
And then for the other escorts.
When an escort working in London’s Canary Wharf expresses concern about the outlook for her profession and asks Dear Economist for advice he responds with relocation and toughing it out in the hope that escort services are not that demand shock elastic. This sounds about right especially since Dear Economist should be able to regress on data going back many centuries, given that an escort service, or at least its core activity, is known as the oldest service industry in the world.
If there is one thing though that Dear Economist might have left out is that when times get hard, the toughest often get going by concentrating more on being better at what they do.
That could also serve as good advice for all those working the other escort service in London’s Canary Wharf, namely the credit rating agencies, and who messed it all up escorting the capitals to some really shady subprime places. Not only do they have to get much better at what they do, but the original question also serves as an alert to them that it might be quite untimely for them to consider moving into more traditional escorts, sort of starting from scratch, even though they have worked intensively with modelling.
Posted by: Per Kurowski | October 6th, 2008 at 4:20 pm | Report this commentDear economist,
Somehow I disagree with your solutions. Ofcourse my opinions might not reflect the reality.
Miss C, I would advise you to consider a more drastic option. Tough times call for tough measures and I suggest you reconsider your profession.
What is required by unemployed young men are de-stressing massages, kind words and someone who can hear out their woes and curses.
Please reconsider to provide these services.
Posted by: Priyank Modi | October 10th, 2008 at 11:57 am | Report this commentcross-posting for ease of reference by interested parties
Posted by: Lxs | October 19th, 2008 at 9:59 pm | Report this comment(for article content, or in appreciation of the contributor):
http://economix.blogs.nytimes.com/2008/10/17/recession-se/ by Lady Rampell