The Null Device

Unusual economic indicators

To figure out the current state and direction of the global economy, economists are turning to somewhat unusual indicators, such as the membership of extramarital infidelity websites and the price of prostitution in Latvia:
The Web site crunched its traffic and membership numbers and found that there was a big increase in both when there was a turning point in the FTSE-100 index, which measures the leading companies listed in London. When the market collapses, people plot affairs. And when the bulls rage, the same thing happens. When it is trading sideways, they stick with their partners.
“It has to do with people’s confidence levels,” says Rosie Freeman-Jones, a spokeswoman for the site. “When the markets are up, they think they can have an affair because they feel they can get away with anything. When the market hits the bottom, they are looking for a way to relieve the pressure.”
And here is more information on the prostitution index, and why prostitution prices make a good economic indicator.
Anyway the problem is that most industries have contractual arrangements which fix prices. Wages are very hard to flex downwards. Rents are fixed over sustained periods and the like. All of this means that people go bust rather than reduce prices – simply because prices are sticky.
Well – most prices. The contractual terms of prostitution are short (an hour, a night) and entry to the industry is unconstrained. That means that the prices are very flexible. Extraordinarily flexible.

There are 1 comments on "Unusual economic indicators":

Posted by: Greg Sat May 30 09:55:44 2009

The argument assumes that people who go to prostitutes or have affairs are share-holders.

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