Study Overview
While condoms are an effective defense against the transmission of HIV, large numbers of sex workers are not using them. We argue that some sex workers are willing to take the risk because clients are willing to pay more to avoid using condoms. Using data from Mexico, we estimate that sex workers received a 23 percent premium for unprotected sex. The premium represents a value of one life year of between $14,760 and $51,832 or one to five times annual earnings. The premium jumped to 46 percent if the sex worker was considered very attractive, a measure of bargaining power.
Study Results
We find that sex workers in Mexico are responding rationally to financial incentives. There is strong evidence that sex workers are willing to assume the risks associated with providing unprotected sex for a 23 percent higher price. This premium increased to 46 percent if the sex worker was considered very attractive, a clear indication of her bargaining power. However, clients who preferred condom use paid an 8 percent premium to use condoms and sex workers who did not want to use condoms had to reduce the price by 20 percent to compensate clients for taking the risk. These findings suggest that the most effective interventions for reducing HIV/STI transmission through commercial sex will be those that target both the supply side (the sex workers and their agents) as well as the demand side (the clients) of the market.