The Pink Tax Myth – Econlib

Again in 2019, Minnesota’s Lawyer Normal Keith Ellison tweeted:

Haircuts for girls value greater than these for males. Additionally well being care, automobile repairs, and many others. That’s actuality for the superior @AOC and each different lady. It’s morally flawed and it threatens the financial safety of ladies and everybody who relies on her revenue. It’s the “pink tax”.

What’s the “Pink Tax”? Ellison’s hometown newspaper, the Star Tribune, defined lately:

Ladies pay hundreds of {dollars} greater than males annually for mandatory objects, an expense often called the “pink tax.” The disparity is especially pronounced amongst client packaged items: Greater than 80% of private care merchandise are gendered, in keeping with a 2023 examine that discovered “massive worth variations” between males’s and girls’s grocery, comfort, drugstore and mass merchandiser merchandise from the identical producer.

This presents one thing of a thriller. If, because the authors of the cited examine, economists Sarah Moshary, Anna Tuchman, and Natasha Vajravelu be aware, “merchandise focused at girls are costlier than comparable merchandise marketed towards males,” as the speculation of the “pink tax” states, why do girls not merely purchase the “comparable” males’s merchandise and cease paying the tax?  

To unravel this thriller, Moshary, Tuchman, and Vajravelu use “a nationwide knowledge set of grocery, comfort, drugstore, and mass merchandiser gross sales:” They “discover that gender segmentation is ubiquitous, as greater than 80% of merchandise bought are gendered.” However crucially, additionally they discover:

…that segmentation includes product differentiation; there’s little overlap within the formulations of males’s and girls’s merchandise throughout the identical class…we show that this differentiation sustains massive worth variations for males’s and girls’s merchandise made by the identical producer.

In brief, the costs of males’s and girls’s merchandise differ as a result of the merchandise themselves differ. My spouse might keep away from paying the “pink tax” on haircuts by asking for a quantity three on high and quantity two on the again and sides. She doesn’t. 

Certainly: 

In an apples-to-apples comparability of ladies’s and males’s merchandise with comparable components, nevertheless, we don’t discover proof of a scientific worth premium for girls’s items: worth variations are small, and the ladies’s variant is inexpensive in three out of 5 classes.

The “pink tax” is a fable. 

Moshary, Tuchman, and Vajravelu conclude that:

These outcomes name into query the necessity for and efficacy of lately proposed and enacted pink tax laws, which mandates worth parity for considerably comparable gendered merchandise.

Certainly they do. Which may clarify why Lawyer Normal Ellison has been silent on the “pink tax” these final 5 years. 

“I all the time inform girls and nonbinary people: Be happy to purchase the cheaper merchandise which might be marketed towards males for your self,” Kara Pérez, founder of economic schooling firm Bravely Go, informed the Star Tribune. That’s sound monetary recommendation, however Moshary, Tuchman, and Vajravelu’s analysis signifies that it isn’t more likely to save the cost-conscious client an terrible lot of cash. If these payments actually had been laying on the sidewalk, girls are sensible sufficient to have picked them up by now.