413047-Underground-Commercial-Sex-Economy

MSA. In Atlanta in 2007, this number was 1.6 million, 33 while in Miami in 2003, it was 1.33 million.
Dividing Atlanta’s 2007 value by Miami’s 2003 value yields 1.21 (meaning that we estimate 21 percent
more drug activity in Atlanta in 2007 than Miami in 2003).
Another proxy was the estimated number of users of illicit drugs. In Atlanta in 2007, this number was
193,000, while in Miami in 2003 it was 148,000. Again, dividing Atlanta’s 2007 value by Miami’s 2003
value yields 1.30 (meaning that we estimate 30 percent more drug activity in Atlanta in 2007 than in
Miami in 2003). So although our original data is in different units, dividing by the value for Miami
generates values that are of comparable scale.
This normalization allowed us to compare these different proxies and determine whether they had similar
patterns over time and across place. We ran a series of regressions separately for each city where we
modeled the normalized proxy levels using a separate linear time trend for each city. Each observation
was weighted by the inverse standard error of the estimate. This simple regression generated estimates of
the relative size of the drug, weapons, and other categories over time and across cities, based on
aggregating different sources of available information, accounting for the fact that some sources of
information are more accurate than others.
Finally, although the set of cross-city and over-time ratios implies an exact solution, this solution will not
be accurate if the ratios aren’t exactly correct. To account for this, we developed a new method, which was
a slight adaptation of the method proposed. We allowed the sex ratios and other ratios to vary by up to
20% (since they were based on less reliable information than drugs or guns), and assumed that each
component must account for at least 0.1 percent of all cash. Then, we found the ratios that best fit the data
and made the cash total as close as possible to the amount of currency in circulation.
In summary, our fundamental approach was to estimate the total size of the cash-based underground
commercial sex market, drug market, and gun market using relative information instead of absolute
information. This required us to first estimate the total size of the underground economy or (as in the
revised approach) the amount of currency in circulation. It also required us to estimate the relative size of
the underground commercial sex economy. Initially, we planned to obtain this information directly from
interviews, but in a revised approach we estimated it based on interview data about pimp travel networks
and circuits. Also, we used a normalized regression to combine a wide array of proxy information for other
categories, rather than relying on a single proxy, as was originally proposed. Finally, we used an
optimization approach that allowed the true ratios to differ slightly from the estimates. Chapter 3 will
describe in more detail the final methodology employed to estimate the underground commercial sex
economy in the eight sites, in addition to providing dollar estimates for the underground commercial sex,
drug, and gun economies.
33 This number is without units and has no meaningful interpretation.
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