Is There a Pink Tax?

Posted on September 20, 2018
We’ve reported on the pay gap between men and women and on women’s lower retirement income compared to men’s. Is there also a “Pink Tax,” where women’s products cost more than men’s? Today’s WatchBlog looks at our recent report on gender-related price differences. Listen to our podcast on some of the price differences we explored, then read on for more.
Gender-Related Price Differences
spacer What we found To explore the issue, we looked at prices for 10 categories of personal care products—things like deodorants, shaving creams, razors, and fragrances. We chose these categories because we found that firms make slight alterations to the products—different scents, colors, sizes—to differentiate them for men and women. Figure 1: Illustrative Example of Similar Products Differentiated to Appeal to Men and Women After controlling for product size and other factors that may have explained some of the price differences, we found:
  • Prices for five of the personal care items we looked at were higher for women: underarm and body deodorants, shaving cream, designer perfume, and body sprays.
  • Two men's items cost more: nondisposable razors and shaving gel.
  • There was no clear difference for 3 other products—disposable razors, razor blades, and mass market perfumes.
Does this mean that we can conclude there is a Pink Tax on women’s products? Not necessarily. Important factors we couldn’t fully control for were costs for advertising and differences in willingness to pay. So, if firms are spending significantly more on advertising costs for women’s products, or if women value things like package design and scents more than men, that could partly explain a higher price. Is that legal? In a legal sense, nothing prevents firms from charging different prices for men’s and women’s versions of personal care products. Firms may be pursuing strategies to maximize their profits, and it’s up to consumers to understand any price differences. While no federal law expressly prohibits businesses from charging different prices for similar goods targeted to men and women, federal agencies can identify concerns about gender discrimination through their oversight of anti-discrimination statutes. For example, agencies monitor trends in the complaints they receive from consumers. However, our analysis of complaints for three agencies found that there were very few complaints related to price differences for consumer goods. Given the limited consumer concern, they haven’t identified a need to incorporate additional materials specific to gender-related price differences. We also reviewed a number of studies on gender-related price differences for financial products like mortgages, where discrimination based on sex is prohibited. The evidence of price differences was mixed, but these studies had important data limitations. Finally, some state and local governments have passed laws to address concerns about gender-related price differences. For example, in 1995, California enacted a law that prohibits businesses from charging different prices for the same or similar goods and services based on a customer’s gender. To learn more about gender-related price differences for consumer products and services and the consumer complaint processes of federal agencies, check out our full report.
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