“It has long been assumed that pubic hair is a remnant of a furrier period in our evolutionary history, and that the real question is why the rest of the body lost its hirsuteness.”
Source: New Scientist August 2009.
Many theories have been proposed to explain its existence, but as yet there's no generally accepted explanation.
Here is a (lice related) theory from Robin A Weiss at the Division of Infection and Immunity, University College London. (Journal of Biology, 2009, 8:20)
Note: Pubic hair is not uniquely human. Most other mammals have it - but the other parts of their bodies are hairy too
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