Blanchard, Racansky, & Steiner (1986) "Phallometric Detection of Fetishistic Arousal in Heterosexual Male Cross-Dressers" provides J. Michael Bailey evidence for his world-view. Bailey interprets this study as Blanchard does. However, a closer examination suggests transgendered persons are being honest and identity and sexuality interact in interesting ways. In the years since I wrote this essay, Anne Lawrence has taken this possibility far more seriously. Unfortunately, she still views both transgender sexuality and identity as pathological.
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Transsexuals are not the only transgendered persons who interpret their experiences in terms of gender. Cross-dressers have often said that cross-dressing is more than a sexual-thing, it's relaxing because it relieves part of a gender conflict too. Ray Blanchard reacted to cross-dressers' self-understanding "with some heat" according to Amy Bloom in an April 2002 article in the "Atlantic Monthly." Blanchard said, "Of course it's not relaxing ... Heels and makeup and a wig and a corset? It's preposterous. Even women don't find that relaxing. Relaxing is a pair of sweatpants, clothing that doesn't even feel like clothing. Cross-dressers want to normalize this, to have it seen as relaxation and self-expression." Blanchard, Racansky, & Steiner (1986) provided the evidence behind this quotation. J. Michael Bailey quotes part of this study in his book, "The Man who would be Queen: The Science of Gender Bending and Transsexualism" (Bailey, 2003, pg. 173), to discount crossdressers' self-perceptions. He includes this study on his website as important for explaining why you should believe his accounts of transsexuality rather the differing personal accounts of transsexuals. "I am not rejecting the claims [of transsexuals] for no reason." "There is good scientific evidence that says you should believe me and not them."  Does this study really justify the cynicism with which J. Michael Bailey and Ray Blanchard speak of transgendered women?
Blanchard, Racansky, & Steiner (1986) studied 37 transgendered women who they divided into four groups, from those who said they were always aroused by cross-dressing to those who said they were never aroused by cross-dressing. They also studied 10 men for comparison (control) who said they never felt like women nor put on women's clothing.  They measured how aroused (using penis volume change) each participant got to each of 4 audio-taped narratives: (1) a neutral non-sexual solitary activity, (2) a cross-dressing scenario, (3) having sex as a man with a woman, and (4) having sex as a woman with a man. I adapted the results to present them graphically in the following figure.
Across the horizontal axis are the four different ways transgendered women described their arousal to cross-dressing and a fifth group of 'normal' men. The vertical axis is a description of how aroused participants got, from most aroused (top) to least aroused (bottom).  The locations of text within each column of the 4 narratives represent the arousal of the members of that group. Narratives that are in the same rectangle are considered equally arousing (statistically speaking). Notice how "cross-dressing" is in the same box as the "neutral activity" for the 'normal' men. Notice how "cross-dressing" is always in a higher box (more arousing) for all 4 groups of transgendered women. Based on this, Blanchard et al (1986) concluded that regardless of self-report, these transgendered women had some arousal to cross-dressing. Unfortunately, this is the extent to which they analyzed their data. Another way they could have looked at the data is to compare directly the arousal to cross-dressing. Notice how "cross-dressing" appears lower and lower as you look at the groups of transgendered women from left to right? Those who say they are always aroused by cross-dressing found the cross-dressing narrative most arousing. Looking at the data this way, we might conclude instead that transgendered women are very accurately reporting their level of arousal to cross-dressing. 
There are even more subtle observations we can make from this dataset. First, let us look at the 'normal' male group. They showed the most arousal to the "sex as a man with a woman" scenario. This makes sense; it's what Blanchard et al (1986) described as the "normal male fantasy." But why is this fantasy so much more arousing than the narrative "sex as a woman with a man?" Afterall, both of these narratives described similar events? The key difference is the perspective. 'Normal' men had a strong physiological reaction to sex when it was described from a perspective they could identify with (i.e., a man's view) but did not have nearly the same reaction when it was described from a perspective they did not identify with (i.e., a woman's view). In short, Blanchard et al (1986) were able to use the same stimuli to measure both sexual arousal and identity!
What does this mean for the transgendered women samples? Look at the groups of transgendered women who were never or usually not aroused by cross-dressing (columns 3 & 4). They found "sex as a woman with a man" most arousing and more arousing than both "crossdressing" and "sex as a man with a woman." That is, despite having male bodies, they were primarily aroused by what Blanchard et al (1986) could have called the "normal female fantasy." In short, their arousal patterns illustrate the primacy of their female gender identity. It is even more fascinating to look at those transgendered women who always felt sexually aroused when cross-dressed (column 1). Consistent with what they say, they found "crossdressing" most arousing. More interestingly, notice how both "sex as a man with a woman" and "sex as a woman with a man" were equally arousing. This suggests that there is a genuine gender identity conflict underlying their feelings even though cross-dressing is clearly most arousing. That is, even among cross-dressers who feel their cross-dressing is primarily sexual, there is an underlying conflict in them between if they identify as men or women. Perhaps this is why cross-dressing is both arousing and relaxing for them. It helps ease their underlying gender identity conflict. Those transgendered women who were usually but not always aroused by cross-dressing (column 2) found all 3 narratives equally arousing. Just as they self-report, they are showing a primary arousal pattern to both the sexual aspects of cross-dressing and a particularly strong identity conflict between if they feel they are men or women.
Blanchard et al (1986) provide some of the most fascinating data available on the inter-relationship between sexuality and identity among transgendered women. Among transgendered women who feel their identity as woman is their primary motivator (columns 3 & 4), we find that their identity really is primary. Among transgendered women who feel their cross-dressing is sexual (columns 1 & 2), we find evidence for why they might also find it relaxing. Cross-dressing helps to ease a conflict they feel between their male and female gender identity.
What Blanchard calls "preposterous" is what his own data illustrates. Among Bailey's quips to his readers is what he calls the "maddening tendency of some autogynephilic research subjects to put down two answers to every question - one by the female self and one by the male self." (Bailey, 2003, pg.168). If only he had been less frustrated by unexpected responses, he might have seen the connection between the survey answers and the genuine conflict between two gender identities that transgendered people sometimes feel. This reminds me of a quotation I have often heard attributed to Isaac Asimov, "The most exciting phrase to hear in science, the one that heralds the most discoveries, is not 'Eureka!' (I found it!) but 'That's funny'." The data Bailey uses to say why you should not believe transsexuals, actually shows why you should believe them. Why haven't Ray Blanchard, Michael Bailey, and others noticed the extraordinary explanatory value of this data before? I worry about what happens when a researcher is preoccupied with avoiding becoming a "slave to sensitivity" and instead projects an image of being "irreverent, cynical, and politically incorrect."  Have some researchers lost the ability to see the subtleties in data that a sensitive scientist would see? Though an in-your-face persona may be effective for promoting political views, emulating this persona is simply not an effective way to search for scientific truth.
Footnote 1: This quotation of Bailey was printed April 21, 2003 in "The Daily Northwestern", the student newspaper on his campus.
Footnote 2: You may have noticed from the title of the study and the title of this essay, Blanchard et al (1986) said they were studying "heterosexual male cross-dressers." Part of this language is the typical bias of referring to us as though our biological sex is more real than of target sex ("heterosexual male"). The added oddity is the word "cross-dressers." In this article, the word "cross-dressers" includes both transsexuals and those typically called cross-dressers.
Footnote 3: Arousal was measured by changes in the volume of blood flow in the penis. These changes are different for each person because of things like penises of different sizes. For this reason each participants' data was statistically changed to a "z-score." The vertical axis illustrates the range of average z-scores for each group stretched or squeezed so that each groups' highest and lowest average z-score are at the same horizontal.
Footnote 4: The only cross-group post-hoc tests by Blanchard et al (1986) was for the neutral narrative. It was equally arousing to all groups. Unfortunately, they did not report enough information for me to infer standard error bars for each narrative so it is difficult for us to estimate other relevant cross-group comparisons.
Footnote 5: The following is a quotation from "The Chronicle of Higher Education" published June 20, 2003: While he [Bailey] counts [male to] female transsexuals among his friends, he says some "have their feelings hurt" when he contends their sex changes were motivated by erotic fantasies, not gender-identity problems. But he adds, "I can't be a slave to sensitivity." Bailey says on page 158 of his book, "Blanchard is irreverent, cynical, and politically incorrect." He goes on to describe, as though an endearing trait, how Blanchard whispered "wickedly entertaining" commentary about deceased colleagues during a eulogy at a professional conference.
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