The myth of pink taxation – Econlib

In 2019, Minnesota Attorney General Keith Ellison tweeted:

Haircuts for women cost more than those for men. Also healthcare, car repairs, etc. It’s reality for super @AOC and all the other women. This is morally wrong and threatens the economic security of women and all those who depend on their income. This is the “pink tax”.

What is the “pink tax”? Ellison’s hometown newspaper, the Grandstand of the starsrecently explained:

Women pay thousands of dollars more than men each year for necessary items, an expense known as the “pink tax.” The disparity is particularly pronounced among consumer packaged goods: more than 80% of personal care products are sexualaccording to a 2023 study that found “large price differences” between men’s and women’s grocery, convenience store, drugstore and mass-market products from the same manufacturer.

This presents something of a mystery. If, as the authors of the cited study say, economists Sarah Moshary, Anna TuchmanAnd Natasha Vajravelu notes that “products aimed at women are more expensive than comparable products marketed to men”, as the “pink tax” theory says, why don’t women just buy the “comparable” products for men and stop paying the tax?

To solve this mystery, Moshary, TuchmanAnd Vajravelu uses “a national data set on sales of grocery stores, convenience stores, pharmacies and mass retailers: » They “note that segmentation according to gender is omnipresent, since more than 80% of the products sold are gender specific”. But above all, they also find:

…that segmentation implies product differentiation; there is little overlap in the formulations of men’s and women’s products within the same category…we demonstrate that this differentiation maintains large price differences for men’s and women’s products made by the same manufacturer.

In short, the prices of men’s and women’s products differ because the products themselves differ. My wife could avoid paying the “pink tax” on haircuts by asking for number three on the top and number two on the back and sides. She doesn’t.

Indeed:

However, in a comparison of women’s and men’s products with similar ingredients, we find no evidence of a systematic price premium for women’s products: the price differences are small and the women’s variant is cheaper in three cases out of five. categories.

The “pink tax” is a myth.

Moshary, TuchmanAnd Vajravelu concludes that:

These findings call into question the necessity and effectiveness of the recently proposed and enacted pink tax legislation, which mandates price parity for products of substantially similar gender.

Indeed, they do. This could explain why Attorney General Ellison has remained silent on the “pink tax” for the past five years.

“I always tell women and non-binary people: Don’t hesitate to buy the cheaper products marketed to men yourself,” said Kara Pérez, founder of financial education company Bravely Go. Grandstand of the stars. This is good financial advice, but Moshary, TuchmanAnd Vajravelu’s research indicates that this is unlikely to save the cost-conscious consumer a huge amount of money. If these bills were actually lying on the sidewalks, women would be smart enough to have already picked them up.