The economics of sexuality: The effect of HIV/AIDS on homosexual behavior in the United States

In this paper, I test a simple microeconomic theory of sexuality. I apply the theory to make predictions about the effect of AIDS on sexuality, since AIDS dramatically altered the cost of sexual activities. Using a nationally representative dataset on sexuality in the United States, I estimate the effect of AIDS on male and female homosexual behavior. To do so, I postulate that people who have a relative with AIDS, on average, have more knowledge, awareness, and fear of AIDS. Empirically, this variable is uncorrelated with a number of individual background characteristics. I present evidence that AIDS causes some men to shift from homosexual to heterosexual behavior, whereas AIDS causes some women to shift from heterosexual to homosexual behavior. Thus, sexual behavior may respond to incentives. I consider alternative hypotheses, including biological theories of sexual orientation and stigma-related survey bias, and argue that they are unlikely to explain the results.