The pink tax myth – Econlib

Back in 2019, Minnesota Attorney General Keith Ellison tweeted:

Hairstyles for women cost more than those for men. Also healthcare, car repairs, etc. That’s the reality for the awesome @AOC and every other woman. It is morally wrong and it threatens the economic security of women and everyone who depends on her income. It is the “pink tax”.

What is the “pink tax”? Ellison’s birth newspaper, the Star Tribunerecently explained:

Women pay thousands of dollars more than men each year for necessities, an expense known as the “pink tax.” The difference is especially pronounced in consumer packaged goods: more than 80% of personal care products are gender linkedaccording to a 2023 study that found “large price differences” between men’s and women’s grocery, convenience, drugstore and big-box products from the same manufacturer.

This shows something mysterious. If, like the authors of the cited study, economists Sarah Moshary, Anna TuchmanAnd Natasha Vajravelu notes, “products aimed at women are more expensive than comparable products aimed at men,” as the “pink tax” theory states. Why don’t women just buy the “comparable” men’s products and stop paying the tax?

To solve this mystery, Moshary, TuchmanAnd Vajravelu usage “a national data set of sales of supermarkets, convenience stores, drugstores and chain stores: “ They “find that gender segmentation is ubiquitous, as more than 80% of products sold are gendered.” But crucially, they also find:

…that segmentation entails product differentiation; there is little overlap in the formulations of men’s and women’s products within the same category… we show that this distinction 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 are different. My wife was able to avoid the “pink tax” on hairstyles by asking for a number three on top and a number two on the back and sides. She does not.

Indeed:

However, in an apples-to-apples comparison of women’s and men’s products with similar ingredients, we find no evidence of a systematic price premium for women’s items: the price differences are small and the women’s version is cheaper in three out of five countries. categories.

The “pink tax” is a myth.

Moshary, TuchmanAnd Vajravelu concludes that:

These results cast doubt on the necessity and effectiveness of recently proposed and enacted pink tax legislation, which would mandate price parity for substantially similar gendered products.

Indeed they do. That might explain why Attorney General Ellison has been silent on the “pink tax” for the past five years.

“I always tell women and non-binary people, feel free to buy the cheaper products marketed to men,” Kara Pérez, founder of financial education company Bravely Go, told the newspaper. Star Tribune. That’s good financial advice, but Moshary, TuchmanAnd Vajravelu’s research shows that it is unlikely to save price-conscious consumers much money. If those bills were really on the sidewalk, women would be smart enough to pick them up by now.