Sexonomics: From Asymmetric Information to Positive Externalities

Sexonomics: From Asymmetric Information to Positive Externalities

By Emily Sands Tuesday, July 24, 2007

Filed under: Health & Medicine, Lifestyle
Good information about sexual health could lead to better—or at least safer—sex.

Good sex might be priceless, but there's still a market for it.

Ideally, such a market doesn't involve money—but demand is rampant, supply plentiful, and the exchange goes on every day in every way. It involves a good bit of utility, but also, as with any investment, a certain amount of risk. And, just like every other market (aside from those in the fantasy world of economics textbooks), the market for sex is imperfect.

Most importantly, asymmetric information pervades the market for sex. With an endless variety of desires, any individual knows more about his or her own sexual habits than any would-be partner: Is he actually interested? Does she like to mix things up? Will he want to cuddle after? Asymmetric information can be exciting.

But in the age of HIV/AIDS and the list of other STDs that permeate the contemporary love market, secrets about sexual health can be dangerous mysteries. And since no one wants to contract a sexually transmitted disease, whether herpes, syphilis, or, of course, HIV, it is in each healthy individual's best interest to choose healthy partners. But how?

Asymmetric information pervades the market for sex.

Abstinence or protection is not enough. Without the anchor of a soul (or sole) mate, Americans are sleeping around, creating many vectors for disease. According to a 2004 ABC News survey, the average American sleeps with 13 partners before settling down. More partners means more risk; and despite whatever condoms, gels, and blind faith people are relying on to protect them, the Center for Disease Control (CDC) estimates that 19 million new infections still occur each year.

Proper testing is a prerequisite to stemming the spread of STDs. Yet even the most conscientious currently have only limited incentive to get tested, especially for diseases that may have no noticeable symptoms. Most syphilis cases, for example, are transmitted by individuals oblivious to their infection. And while some who do get tested carry around their lab results, most do not. The current lab printouts are cumbersome and there is a stigma associated with even bringing up the topic. This creates a serious information problem.

The solution to this problem of viruses, trust, and lust may be for potential lovers to view their exchange not as an act of passion, but rather as one of market economics. Like any profitable transaction, if done correctly both parties benefit, and no one suffers negative externalities. While there's no way to force rationality on sex any more than on any other good, one solution for those of us willing to put dispassion before passion is, for lack of a sexier description, a medical identification card. The card would be far more credible than a mere "Baby, I'm clean" and far less cumbersome than sharing a full lab printout. It has the potential to increase trust and reduce the stigma of talking about STDs in the heat of passion.

Every time someone chooses to get tested for an STD, the lab can record on a wallet-sized card the patient's name and the dates on which he or she last tested negative for various diseases. The card proves the individual's medical status, and then each can choose to share—or not to share—his or her card with potential partners. Since every person is in control of his or her own information, this system raises no privacy concerns. It is even consistent with the infamously stringent Health Insurance Portability and Accountability Act (HIPAA).

Anyone with a shred of responsibility and the slightest intention of sowing his or her wild oats should get tested frequently and learn to share his or her card with potential partners before the candles are lit, or the last Cuervo shot poured. More important still, those who do share must expect reciprocity. Anyone who has been sexually conservative, or practiced safe sex, will be eager to get tested and then to share his or her card in order to be "rewarded" with similarly healthy partners. This will encourage frequent testing and card-sharing, thereby creating a self-enforcing equilibrium among healthy individuals.

Granted, anyone who has already contracted an STD will hesitate to share results. But withholding the card, in and of itself, is still good information. Even though we're supposed to respect people who "plead the Fifth," choosing not to share could reasonably be interpreted as a signal of higher risk. The message would be obvious, and the would-be partner could decide in turn whether or not to withhold sex.

Interestingly, individuals who already suffer from STDs will also be better off. They will benefit directly by being able to identify partners who share their disease. Some of the most conscientious of those suffering from STDs currently self-select similarly infected partners through internet dating sites like stdmatch.net. More generally, with additional incentives to get tested, curable STDs can be caught and treated in earlier stages, thereby reducing the likelihood of serious complications including infertility, cancer, and higher susceptibility to the ravages of HIV (S.O. Aral, "Sexually Transmitted Diseases: Magnitude, Determinants, and Consequences," International Journal of STD and AIDS 12, no. 4 (2001): 211-215).

This system would also engender positive externalities, benefiting more than just those directly involved in the coupling. First, reducing the spread of STDs will reduce the risks not only for couples who choose to share cards, but also for every one of their future potential partners—and, of course, for each of those future partners' future partners, ad infinitum. Second, notwithstanding the incalculable reduction in human suffering, the card system will reduce the medical costs of treating STDs, both because the rate of infection will fall, and because more testing will catch STDs at earlier stages, when they are generally less expensive to treat. The Center for Disease Control reports that the national cost of treating STDs is currently about $14.1 billion annually—all for diseases that are, in theory, 100 percent avoidable.

When it comes to our sexual health, we should all be risk averse. Thus, by reducing unnecessary and unwanted risk, this system will boost utility. In a world that approaches sex as rationally as it approaches business, the best new pickup line just might be, "Show me your card, and I'll show you mine." Now that's sexy.

Emily Sands is a research intern in health policy at the American Enterprise Institute.