Two years ago, Tiffany Edwards, now 23, was pondering just how much her degree from New Jersey's Montclair State University was going to cost her.
Though she was saving money by living at home with her parents, tuition alone for four years at the school, where she is studying to be a physical education teacher, would be in the neighborhood of $60,000.
Sitting at the desk in her childhood bedroom, she face-palmed herself with frustration as she considered the debt her degree was going to leave her.
"Then I saw a thing on Facebook on the side," she said. It was an ad for SeekingArrangement.com, the world's largest sugar daddy website, and she decided to explore the option.
She's far from the only one. In our recently down and still sluggishly rising economy, her choice to become a sugar baby is becoming less taboo. And on the other side of the equation, the economy is creating some interesting effects for the sugar daddies, too.
It's pretty straight-forward economic theory: The supply of men with the means to support women in quid pro quo arrangements has dwindled, while the number of women looking for sugar daddies to help them cover their rents, car loans or tuition has increased. The result: A lower "allowance" threshold that has enabled men of more modest means to enter the game.
And if the motivations of the participants in sugar daddy arrangements strike you as perhaps a bit coarse or ignoble, recognize that the underlying idea is entirely Nobel.
The model is an efficient way of matching less well-off people with those who have the financial resources they need — the crux of "the theory of stable allocations," which won Alvin E. Roth and Lloyd S. Shapley the Nobel Prize in economics last month.
Everyone Is Seeking Something
Brandon Wade, 42, who grew up in Singapore and moved to the U.S. to attend MIT, created SeekingArrangement in part to overcome his own inadequacies in the dating world.
"I was shy with women and don't have huge muscles, nor do I have the social skills Casanova has," he said. "I didn't have my first kiss until I was 21."
He noticed, though, that women could be just as attracted to money as to those other qualities, which led him to start his matchmaking website.
And the amount it takes to attract those women has dipped, he said. Today, sugar babies are willing accept well under the $4,000-a-month level that many of them expected — and often exceeded — in the pre-recession years.
That's lowered the bar to entry for the men, Wade said: The average net worth of his sugar daddies has fallen 21 percent since 2007, from $7.1 million then to $5.6 million in 2012. And in 2006 and 2007, the men's average age was 44. In 2012, it dropped to 40.
"The general trend has been that you can be generous — you don't have to be a multimillionaire or a billionaire to compete," he says. "The number of fish in the pool has ballooned. That's going to attract fishermen of all sorts."
The Tuition Equation
And it attracts all sorts of "fish" as well — many of them in similar situations to Ms. Edwards.
Through the site, she hit it off with a guy who works in finance, and she served as his companion for a year. In incremental payments, he gave her a total of $15,000. She didn't want to ask too much about his job and only learned the barest details.
"I know he was away a lot on business," she said. "I know he worked in [New York]. I know it had something to do with the stock market." He admitted he never had a girlfriend. He drove a Ferrari."
Edwards feels she is part of a larger generational trend in the Great Recession era, and given the uptick in sugar babies trawling SeekingArrangement for their own benefactors, she may be right. Since the beginning of 2008, the site has seen a 358 percent increase in member sign-ups.
"For my age, I think it's a pretty popular thing to do," Edwards said. "A lot of parents aren't able to pay for their child's school tuition. At the age of 23, we're in debt already."
Historically 25 percent of SeekingArrangement's sugar babies were in school, but that figure has ballooned to over 40 pecent in recent years. There's also been a surge in the number of single mothers on the site — something the company credits to rising levels of unpaid alimony and child-support.
Exchanging Awkwardness for a Future
"The first night was weird," Edwards said of her initial sugar daddy date. "We went to see a movie. Was it 'Paranormal Activity' 2 or 3? That was awkward. After that, we went to some nice restaurant in Montclair." At other times, Edwards served as a companion for two other guys, receiving $200 for a company dinner and $500 for a company picnic.
Edwards said the men were socially awkward, like "the nerdy guy in high school who got a good job."
"Sometimes I would feel guilty about the money," she said.
But she has ambitions that won't finance themselves. She wants to start a fitness facility with Zumba and maybe pole dancing. "Seeing what [those men] had, and their cars ... it made me want to be a better person," she said. "Just because I'm a girl, it doesn't mean I can't have those things."
Edwards says she has no regrets.
"I met some nice people and got to take care of some bills," she said. "At the time, I was driving an old Corolla. I saved my money, and I got a Nissan Maxima. I feel good. I'm not on their level yet, but one day I'll feel good."
Lend Me Some Sugar ... For Less
These Dickensian benefactors are feeling good, too. Just take, Joey Fazio, a bona fide sugar daddy.
The 32-year-old in Jacksonville, N.C. has dropped as much as $15,000 on one girl for a weeklong vacation to the Dominican Republic. Some girls he has had "arrangements" with have been more low-overhead — just $300 for a dinner, or a little more for a night on the town.
But Fazio wasn't always a player waving his wad of cash across the Internet. He married his high school sweetheart and dropped out of college to join the Air Force. During his six years in the military, he earned a degree in computer science, and simultaneously started a little record label. He left the service, got a corporate job in IT, and made pretty good money, but after nine years, his marriage fizzled.
Things weren't so bad, though. He sold his record label and used the cash to buy various franchised businesses, from restaurants to hotels. He owned a few gentlemen's clubs and standard nightclubs. By 29, he was a millionaire.
"Not too shabby, not for a kid in his twenties," Fazio said. "I was young, single, successful."
He wanted to take advantage of his resources and knew he could use his financial means to attract women.
Dating sugar babies wasn't that far a philosophical stretch for him. "I was used to paying for everything," he said, "and I was involved in a lifestyle and business built around the same principles."
Fazio suggested his youthful, in-shape physique also allows him to command a lower price-point for dates and relationships than the paunchy men decades older.
It's true that Fazio is a bit of an outlier: The dominant professions of sugar daddies varies depending on the city. Movie industry types dominate in L.A., entrepreneurs and techies in San Francisco, politicians and lawyers in Washington, D.C., and finance types in New York City.
"The website tends to mirror where the wealth is created," Wade said.
It's Not Just the Economy, Stupid
Marina Adshade, a professor at the Vancouver School of Economics and author of the forthcoming Dollars and Sex, is loath to credit the down economy too much for the sugar surge. Instead, she gives more recognition to the technological advances that have allowed these online connection platforms to exist.
"From an economic perspective, there has always been an arbitrage opportunity for women on this market — they are getting paid far more than you would expect given the skills that are required for the job," she said. "It isn't like other types of sex worker arrangements in that there are few risks involved — they are less likely to be arrested, less likely to be infected with an STD since they only have one partner, and less likely to be the victim of physical abuse. So what you might be observing is not a movement to a new equilibrium but rather an adjustment to the proper market equilibrium."
Further, the taboos around these types of relationships may be fading, according to Dan Ariely, a professor of psychology and behavioral economics at Duke.
"I wonder how much of it is financial need and how much of it is the perception of social acceptance that comes from these kinds of services — that once they get out there, women look at them, figure out that this must be the new standard, and go for it," he said.
But according to Adshade, the sugar daddy trend may just reflect rich guys using their resources more efficiently.
"Perhaps it is not men with more modest incomes who are entering the sugar daddy market but rather higher income men who are now substituting away from more expensive forms of prostitution to the cheaper sugar daddy market," she said. "After all, $4,000 will probably only get you one night with a high-end sex worker compared to a whole month with a student looking to pay her tuition."
"Whenever the price of a good or service falls relative to alternative goods or services — here because of an increase in supply — buyers will substitute towards that now relatively cheaper service," she said. "That is a change on the intensive margin: Existing players on the market have changed behavior. But there is possibly a change on the extensive margin as well, where others men who weren't previously playing on the market are now entering."
No Sex in the Champagne Room?
There may be a smooth economic explanation for all of this behavior, but is it all morally sound? Is this simply the exchange of sex for money?
Wade, for his part, views this system as an inevitability and has no moral qualms about it.
"People ask me, 'Why are you promoting all this stuff?'" Wade said. "The website is a reflection of what happens in society. They wouldn't be on here if not for the financial issues they're facing. It's a problem with the economy today or with college education as a whole."
Wade even suggests he's helping the longevity of relationships.
"Fifty percent of all marriages end up in divorce, and a huge percentage of that failure is from financial-related influences," Wade said. "This website puts the financial component up front and allows people to understand each other's needs and expectations ... It's a practical approach to dating."
Some 80 percent of the relationships that form on SeekingArrangement do have a sexual component, according to Wade. But sex isn't a required part of the equation.
"It's a little different than an escort service," Edwards said. "That's just dirty. I think it's sad that we can't make as much as we need. For a 21-year-old girl, for a student, you can't work that much. I think it helps, and everyone's in it for the right reason."
Edwards claims she never had sex with any of the men she was with in an arrangement, and states she was there simply as a companion.
"If you want that, go on a corner in New York, and pick up a prostitute," Edwards said. "Or go to Las Vegas ... or The Cat House, that show on HBO. Gross overweight men come in and pay a certain amount of money for sex. It's disgusting. I watched it one time. I could only handle 10 minutes. It's not even classy porn that's good looking to watch."
But what about true love: Isn't this a sham or superficial criteria to value only someone's looks or financial means?
"It's no different from the guy who goes to the gym to get a muscular physique to attract women," Wade said. "You need the bait to get somebody interested in you. People need to get each other better before anything can happen. I have understood that, and I have built my bait around financial means and generosity."
Wade even met his match on his website — Tanya, a cash-strapped recent college graduate. They were married in February.
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