Latvian Hooker Index: No Recovery in Sight


Riga, Latvia, 19 July 2009. The Latvian Hooker Index is not showing any signs that the economy is on a rebound. Prices still linger at around US $60, showing signs of deflation and a general slump in the Baltics.

The price of Latvian prostitutes, along with the number of extramarital affairs happening have both been proposed as accurate indicators of economic health there, though this could apply anywhere in the world.

According to economists, "animal spirits" play a considerable part in the inner workings of the business cycle. This may be part of the reason business cycles have always been so hard to predict.

John Hempton, from Bronte Capital, suggests that the price of prostitutes in Latvia is a good barometer of Baltic economies and their overall wellbeing.

"The contractual terms of prostitution are short (an hour, a night) and entry to the industry is unconstrained," he says. "That means that the prices are very


This price flexibility is essential to mirror the economic bigger-picture, as it can change overnight.

Prices have slumped about two-thirds in the past year or so, and deflation looms in the Baltic region. This index seems valid and accurate so far.

Another similar way of measuring economic conditions is by looking at extra-marital affairs. The people doing this are

This site facilitates such encounters, and has more than 300,000 members.

"It has to do with people's confidence levels," says Rosie Freeman-Jones, a site's spokesperson. "When the markets are up, they think they can have an affair because they feel they can get away with anything. When the market hits the bottom, they are looking for a way to relieve the pressure."

The site indeed found a correlation between such affairs and the rise and fall of the FTSE-100 index. When markets are up and down, activity begins. When markets are flat, people stay home.

Interestingly, in November, the site's traffic was up dramatically as the markets crashed, but it hasn't spiked again. This tells us that the recent market rises in March and April were only bear-market rallies, not full-blown recoveries.

These economic benchmarks could indeed be part of what economists have been looking for. Obviously the Baltic Dry Index or even the Case-Schiller Index couldn't predict the economic trauma the world has experienced.

New indicators will always be welcome.

Vladimir Gonzales,