NSFW. Click the link if you don’t know what that means.
If you haven’t heard, there’s an undergraduate at Duke his is public about doing porn to pay her bills. What I have below is the fourth part of series on The Source about her experience. My guess is that most of you won’t have a problem with what’s shown: if you do, don’t watch.
This video mostly covers her at a convention meeting fans. Just like, say, baseball … the fans pay cash for autographs and staged photos.
Towards the end of the video, she counts up her take from that day, and it’s $981. That’s revenue.
She figures it cost her $600 in expenses to do the show (flight, hotel, meals, incidentals), which she calls overhead. The distinction between fixed and variable costs in microeconomics is more situation-specific than most students are aware of. In this case, that overhead is a variable cost from the perspective of her whole life, because she didn’t have to do the show. But, once she’s decided to do the show, the overhead is a fixed cost of that show (because she could probably work longer signing autographs to increase her revenue without increasing those fixed costs). I know … more complex than you may need.
Then she recognizes that those overhead costs apply to both days of the show, while she hasn’t counted the revenue from the first day. She figures she made $600 more in revenue the previous day, subtracts out $100 in other expenses, and figures she cleared $800 for the weekend.
I’m not sure how she’s set up for tax purposes. But, the video doesn’t say anything about that, so let’s assume that she’s a proprietor. Then that $800 is the accounting profit from her business, and that goes straight into her bank account as individual income.
But she recognizes and mentions that she did a lot of work for that $800 (and I don’t mean something crude about porn, I mean just working at her convention booth).* Presuming she did two 8-hour days, that works out to about $50/hour: comparable to what professors in the SUU School of Business make (not me, I’m a peon). So, it’s great money for an undergraduate, but she’d probably be making that in 15-20 years anyway.
Now, here’s where the porn comes in. Her accounting profit is $800. But her economic profit would subtract out many things, most importantly opportunity costs. The reason most people don’t do porn is not that they can get paid better at other jobs, but that they suspect that doing porn is blocking them out of future job possibilities that might pay more. So it’s not so much an opportunity cost as the cost of opportunities foregone.
In this case, I think those opportunity costs fall mostly on the actual doing of the porn, rather than on going to conventions. So for this particular weekend, her accounting profit is $800 and her economic profit might be the $500 excess she makes over working some other job back at school.
But, for her career, let’s say she makes $100K. That’s accounting profit. She’s willing to do that because her economic profit is less than that, but still positive and presumably large. Just to throw out a number, perhaps her opportunity costs are $60K, so she’s left with $40K in economic profits. When you choose not to do porn, you’re thinking that the opportunity costs of that far outweigh the accounting profits. When you put it that way, the difference between someone who does porn and someone who does not is largely their subjective evaluation of their opportunity costs: if you don’t think they’re large, you do porn, if you do think they’re large, you don’t.
* I’ve actually worked convention booths (no teasing allowed, this was not in porn), and it’s surprisingly hard work if you’re busy.