FROM PROBLEM TO SOLUTION:

How Reducing Demand Reduces Sex Trafficking

AN ECONOMIC APPROACH
ASSUMPTIONS
 ASSUMPTIONS

• Business life cycle

 ASSUMPTIONS

• Sex is an elastic good

 ASSUMPTIONS

• 70% profit margin

 ASSUMPTIONS

• 1,000,000 US sex trafficking victims (<.05% population)

• 10 commercial sex acts per day
• 365 days per year
• 3,650,000,000 demanded commercial sex acts per year
• 10,000,000 commercial sex buyers per day in the US (3% population)
• ((2,000 were arrested in the US in 2016))
 ASSUMPTIONS

• $1000/day gross revenue per victim

FORMULAS
PROFITABILITY OF A SEX SLAVE

𝐸𝑉 = 𝑅𝑑 − 𝑂𝑑 × 𝑛𝑑
 COST OF RISK

𝐶𝑂𝑅 = 𝑃𝑝 × 𝑃𝑐 × 𝑚

𝐶𝑝 𝑛𝑐
𝑃𝑝 = 𝑃𝑐 =
𝐶𝑎 𝑛𝑝
 COST OF RISK

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑟𝑟𝑒𝑠𝑡𝑠 𝑀𝑎𝑑𝑒 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛𝑠

𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 =
𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑐𝑡𝑠 𝐶𝑜𝑚𝑚𝑖𝑡𝑡𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝑇𝑟𝑖𝑎𝑙𝑠
THE CALCULATIONS - CURRENT
 PROFITABILITY OF A SEX SLAVE

𝐸𝑉 = 𝑅𝑑 − 𝑂𝑑 × 𝑛𝑑
𝐸𝑉 = 1000 − 300 × 365
𝑬𝑽 = $𝟐𝟓𝟓, 𝟓𝟎𝟎
Per year. Per victim.
 CURRENT COST OF RISK

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.00000027 x 0.4979 x $1.5m = ??

𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑟𝑟𝑒𝑠𝑡𝑠 𝑀𝑎𝑑𝑒 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛𝑠

𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 =
𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑐𝑡𝑠 𝐶𝑜𝑚𝑚𝑖𝑡𝑡𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝑇𝑟𝑖𝑎𝑙𝑠
994 470
𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = = 0.00000027 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 = = 0.4979
3.65𝐵 994
 CURRENT COST OF RISK

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.00000027 x 0.4979 x $1.5m = ??

COR = $0.20 per demanded commercial sex act

COR = $2/day -- $730/year

𝑬𝑽 = $𝟐𝟓𝟓, 𝟓𝟎𝟎
THE CALCULATIONS – MAX CONVICTIONS
 COST OF RISK (MAX CONVICTIONS)

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.00000027 x 1.00 x $1.5m = ??

𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑟𝑟𝑒𝑠𝑡𝑠 𝑀𝑎𝑑𝑒 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛𝑠

𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 =
𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑐𝑡𝑠 𝐶𝑜𝑚𝑚𝑖𝑡𝑡𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝑇𝑟𝑖𝑎𝑙𝑠
994 𝟗𝟗𝟒
𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = = 0.00000027 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 = = 1.00
3.65𝐵 994
 COST OF RISK (MAX CONVICTIONS)

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.00000027 x 1.00 x $1.5m = ??

COR = $0.40 per demanded commercial sex act

COR = $4.05/day -- $1,478/year

𝑬𝑽 = $𝟐𝟓𝟓, 𝟓𝟎𝟎
THE CALCULATIONS – MAX FINE
 COST OF RISK (MAX FINE)

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X MAX $ FINE

COR = 0.00000027 x 1.00 x $10m = ??

𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑟𝑟𝑒𝑠𝑡𝑠 𝑀𝑎𝑑𝑒 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛𝑠

𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 =
𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑐𝑡𝑠 𝐶𝑜𝑚𝑚𝑖𝑡𝑡𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝑇𝑟𝑖𝑎𝑙𝑠
994 994
𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = = 0.00000027 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 = = 1.00
3.65𝐵 994
 CURRENT COST OF RISK

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.00000027 x 1.00 x $10m = ??

COR = $2.70 per demanded commercial sex act

COR = $27/day -- $9,855/year

𝑬𝑽 = $𝟐𝟓𝟓, 𝟓𝟎𝟎
THE CALCULATIONS – MAX PROSECUTIONS
 COST OF RISK (MAX PROSECUTIONS)

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.000005 x 1.00 x $10m = ??

𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑟𝑟𝑒𝑠𝑡𝑠 𝑀𝑎𝑑𝑒 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛𝑠

𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 =
𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑐𝑡𝑠 𝐶𝑜𝑚𝑚𝑖𝑡𝑡𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝑇𝑟𝑖𝑎𝑙𝑠
18,250 994
𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = = 0.000005 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 = = 1.00
3.65𝐵 994
 COST OF RISK (MAX PROSECUTIONS)

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.000005 x 1.00 x $10m = ??

COR = $50 per demanded commercial sex act

COR = $500/day -- $182,500

𝑬𝑽 = $𝟐𝟓𝟓, 𝟓𝟎𝟎
THE CALCULATIONS – DEMAND
 COST OF RISK (MAX PROSECUTIONS)

COST OF RISK = CHANCE OF ARREST X CHANCE OF CONVICTION X FINE

COR = 0.000005 x 1.00 x $10m = ??

𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑟𝑟𝑒𝑠𝑡𝑠 𝑀𝑎𝑑𝑒 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛𝑠

𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 =
𝐴𝑐𝑡𝑢𝑎𝑙 𝐴𝑐𝑡𝑠 𝐶𝑜𝑚𝑚𝑖𝑡𝑡𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝑇𝑟𝑖𝑎𝑙𝑠
18,250 994
𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐴𝑟𝑟𝑒𝑠𝑡 = = 0.000005 𝐶ℎ𝑎𝑛𝑐𝑒 𝑜𝑓 𝐶𝑜𝑛𝑣𝑖𝑐𝑡𝑖𝑜𝑛 = = 1.00
3.65𝐵 994
 DEMAND REDUCTION MODEL

• Increase chances of traffickers being arrested

• Law enforcement investigations

• Increase chances of traffickers being convicted

• Community awareness, victim intervention

• Decrease demanded commercial sex

• Education, disrupt, penalize
AN ECONOMIC APPROACH