Mainstream economists assume the following things about human behavior:

•We are self-interested (purely)
•We are rational
•We have perfect information
The principle of revealed preference tells us that if we observe something, people MUST be
getting some benefit from it, and the benefits must outweigh the costs.

We know that there is some risk to unprotected sex, therefore, if we observe that people engage in unsafe sex, it must be perceived as in some way “better” than safe sex.

Usually, we confine our analysis to “market goods”- goods and services that you can buy in the market at a given price. There is no reason not to try to apply the principles to actions not in the market-i.e. safe vs. unsafe sex.
The model is set up as follows: Two “agents” in the model, f and m (you don’t need to think of these people as female and male, it could be two male partners, two female partners-we just need to distinguish between)
Each time potential partner are about to “negotiate” for sexual relations, you will decide whether to engage in protected or unprotected sex given the following information:
E(Ui) = expected utility (economic speak for “happiness” or a feeling of satisfaction.)B = benefit from unsafe sex (relative to safe sex)
C = costs from unsafe sex (relative to safe sex)

This will be the probability of getting AIDS* how much you think AIDS will affect life

Pf, Pm: Probability that partner f and partner m are already infected with HIV.

They essentially also assume that the monetary cost of a condom is zero.

Decision rule is:

For m: Engage in unsafe sex if : E(Um)=B-C(1-Pm)*Pf > 0

and for f engage in unsafe sex if: E(Uf) = B- C(1-Pf)*Pm > 0
In other words, the benefits of unsafe sex must outweigh the costs for the individuals to engageDon’t have unsafe sex if these two equations are less than or equal to zero.

May seem odd to reduce people’s feelings/actions to the result of a mathematical equation, but it clearly delineates the incentives and disincentives. We can then hypothesize about why different people will behave differently: ;must be something different in how they view the benefits and costs of the decision.

For example:

If both partners are already infected, additional unsafe sex won’t affect them, will continue to have unsafe sex.

If person i is infected, there is no cost to them from having unsafe sex, so they will want it. Partner will have higher costs to engaging in unsafe sex, so not clear whether “trade” will take place. This is under the assumption that people only care about themselves.

If person i who is infected wants to have unprotected sex but their potential partner does not, he/she can compensate the partner to make her/him change his/her mind. In other words, try to increase the benefit part of the equation for the partner.

Feminist Critique

Discussion of problems in pairs negotiating "safe sex trade" in class:

Were there problems? No one could come up with a safe sex trade:

Excuses from reluctant partner:

Don't you love me?
Don't you trust me?
It's better without a condom

etc....

Note that you are :

Extremely well educated relative to world population
Extremely wealthy relative to world population

How does this apply to Philipson’s and Posner’s conclusions that
1) only mutually beneficial trades will occur
Even if one partner wants unsafe sex, and the other does not.
One partner can compensate the other

2) we can predict how the AIDS epidemic will progress: when the probability of having sex with an infected partner increases enough, everyone/most people will start to have safe sex. The epidemic will be self-limiting.
***Philipson and Posner assume that “market power” is equal. Both partners have bargaining chips, and neither have more chips than the other, so fair trades can be negotiated.

This is an assumption not explicitly made in Philipson and Posner, but is critical for their conclusions, nonetheless.

It’s important to realize what assumptions are underlying the model and how they can affect the conclusions
Christensen give a feminist argument that these assumptions are not realistic:
Men more averse to condom use, but women cannot successfully negotiate for safe sex because:
Women earn less than men, even in the US : gender inequality will matter, women will be less able to convince partners to wear condoms

Threat of physical violence is also present

Social factors: men are supposed to be the initiator in sexual relations, women are supposed to be submissive.

Inequalities not addressed by Philipson & Posner:
Poor women/ women of color in U.S.
Women in nonindustrialized nations have even less bargaining power

Plus:
Price of condoms is NOT negligible globally or among poor
There is not a lot of good information about AIDS transmissions, even for well-educated, so assumption of perfect information is a bad one
Underestimate how drug and alcohol use affect ability to make “rational” decisions
Risk groups in US include young people and IV drug users, who may be less likely to act rationally (not clear, since IV drug users do respond to clean needle programs. Sexual relations, however, are not always treated rationally by anybody)

AIDS is concentrated among the “impoverished, stigmatized and disempowered” -
The P&P model for rich, white, male Americans doesn’t apply

Emphasizing “choice over constraints” is dangerous: leads to a blame the victim mentality

Side bar: Speculation on effects of welfare reform on AIDS/HIV transmission
Women earn less than men, many are reliant on male partners for livelihood

Welfare system provides an alternative, gives poor women more bargaining power.

New limits on spell and lifetime receipt of welfare benefits:

Have resulted in more employment (in the good economy), but
Have not pulled women out of poverty.

If economy goes into recession, real fear that the welfare reform will reduce women's outside options, they will be less able to insist upon partners' use of condoms, HIV/AIDS will spread more quickly.

Plus side for Rational economic model

Does provide a framework of analysis:

Describes incentives and disincentives for individual behavior: if you can alter the perceived costs or benefits of the action, you can alter the behavior.

I would also argue that one could expand the model to include bargaining power differences and it would better predict human behavior in this arena.