Rubber

A dear friend of EE recently severed affiliation with an advocacy group (start here, more here). Her leaving, or rather her leaving in this particular fashion, has sparked some discussion. I'd like to briefly address a point that came up yesterday.

If you read through the first link above, you'll see that one of The Peej's complaints about YV was that their decision to hire Miriam Weeks was marred by the Duke University student's "few libertarian bona fides." In conversation yesterday, A-Cast called into doubt the economics acumen of Ms. Weeks.

.@VGLuttrell @amelapay @CathyReisenwitz The economics in the TIME piece were p bad. Demand for porn is not inelastic.
— Andrea Castillo (@anjiecast) August 18, 2014

The offending passage in the Time piece is here (preceding ¶ included for context)

But my porn work pays the exorbitant tab for one simple reason: Demand for porn actresses, especially extremely young ones like myself, far exceeds supply. How interesting that the same basic principle explains why my tuition bill is so high in the first place.

Demand for education, kind of like demand for porn, is pretty inelastic. Kids like me have been told our whole lives that higher education is the only way to be successful in America. President Obama made it clear he wants to keep that demand high in a speech in Austin, Texas.

As far as the misuse of terms of art from economics go, I am well-convinced that you've seen worse in print over the years. Heck, just turn on C-Span and listen to any randomly selected Congressman yak for more than 20 seconds. I don't expect A-level economics from a lower-division undergrad, not even a Blue Devil. But Anjie? From her, I expect nothing but the best. So it is that I feel entirely comfortable parsing her comment.

With apologies to Leonard Cohen, everybody knows that the [price] elasticity of demand for a good is just (∂Qd/∂P). Convention typically drops the negative sign. Essentially what we speak of when we discuss the price elasticity of demand is how responsive consumers are to price signals. Perfect price inelasticity of demand means that consumers would be willing to spend infinity for a marginal unit of consumption. "My kingdom for a horse." "Houston, we have a problem." Taco trucks in the desert. Perfect price elasticty means that even the tiniest fraction of a cent hike in the price would eliminate consumption altogether. "I could take it or leave it." The ideal forms are logical bounds on behavior and are not likely to ever actually be encountered. The middle bound between "elastic" and "inelastic" is quite plausible however, and is something of a golden snitch in price theory. If the partial of quantity demanded relative to price is 1, the good is "unit elastic."

When Andrea claims, "Demand for porn is not inelastic," that has a specific technical definition. She means that (∂Qd/∂P) > 1. The advent of cheap Internet porn has shown that dropping the marginal cost of watching others making the beast with two backs has indeed increased the quantity demanded by a whole lot. Pity the poor researcher in 2014 who can't for love or money obtain a control group of men who've never consumed porn.

What Andrea didn't do (and forgive her, she only had 140 characters to work with) was identify the error made in the two paragraphs I quoted above. Look closely and you'll see how Ms. Weeks transitions between the supply of porn ("Demand for porn actresses...far exceeds supply") and the demand for pornography. These are two different phenomena, as anyone who's kept a small stash during a months-long deployment can attest. It's entirely possible for the demand for pornographic actresses to be inelastic while the demand for pornographic products to be quite elastic indeed.

The interesting thing for me, at least as far as the economics goes, is how we think about this market when we get into discussions of elasticity. One of the determinants of demand (distinct from quantity demanded) is the price of substitute goods. If substitutes become cheap, demand drops. If you are employed by a studio, then is amateur porn shot with off-the-shelf equipment part of your market, or is it a substitute? The division of analysis is limited by the extent of the market, so to speak. What is the "right" way to model and measure the elasticity of porn? Is there a "right" way at all? And if it's troublesome to get the positive analysis right, how much more difficult is it to get the normative conclusions right?

Is porn euvoluntary or not? How do we know?