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Book Chapter to appear in Handbook on Economics of Prostitution (Oxford University Press)

A method for determining the size of the underground cash economy for commercial sex in seven US cities

Bilal Khan - Department of Mathematics & Computer Science, John Jay College, CUNY
Mitch Downey – Department of Economics, University of San Diego
Meredith Dank – Urban Institute, Washington D.C.
Kirk Dombrowski - Department of Sociology, University of Nebraska-Lincoln

In this chapter we seek to: (1) derive a more rigorous estimate of the underground commercial sex economy (UCSE) in seven major US cities; and (2) provide an understanding of the structure of this underground economy. To estimate the size of the UCSE accurately, we had to produce simultaneous estimates in each city for the size of the cash-based trade in both illegal drugs and illegal firearms. Ordinarily, estimates for each of these are made singly, and often for a single locale at a single time. Our approach goes in the opposite direction. The operating assumption of the estimation process that follows is that estimates of the size of various domains of the underground economy (UE) are more accurate when comparative data across time and across different locations are taken into account, and when estimates of the size of one domain of the UE are forced to balance estimates of other domains in the UE with which they coincide.