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The Pink Tax Myth – Econlib

by xyonent
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Pink Tax.jpg

In 2019, Minnesota Attorney General Keith Ellison tweeted::

Women’s haircuts cost more than men’s. Plus, medical bills, car repairs, etc. That’s the reality for great people. @AOC And all other women. This is morally wrong and threatens the economic security of women and all those who depend on their income. That’s the “pink tax.”

What is the “pink tax”? Ellison’s hometown newspaper Star TribuneHe recently explained:

Women spend thousands of dollars more on essentials than men each year, a practice known as the “pink tax.” This disparity is especially pronounced when it comes to consumer goods. Over 80% of personal care products are Has genderA 2023 study found “significant price differences” between men’s and women’s products from the same manufacturer in grocery, convenience, drug and mass retail stores.

This is something of a mystery. As the authors of the cited study say, economists Sarah Moshary, Anna Tuchmanand Natasha Vajravel points out that “products aimed at women are more expensive than equivalent products marketed to men,” so according to the “pink tax” theory, why don’t women simply buy the “equivalent” men’s products and pay the tax?

To solve this mystery, Moshary, Tuchmanand Vajravel said,National data sets on grocery, convenience, drug, and mass retail sales: They conclude that “gender segmentation is ubiquitous, with over 80% of products sold being gender-based,” but importantly, they also found that:

…Segmentation involves product differentiation, and there is little overlap in the formulations of men’s and women’s products within the same category…This differentiation has been demonstrated to result in large price differences between men’s and women’s products made by the same manufacturer.

So the reason the prices for men’s and women’s products are different is because the products themselves are different. My wife could avoid paying the “pink tax” on haircuts by getting the top cut by a number 3 and the back and sides cut by a number 2, but she doesn’t.

surely:

However, when comparing women’s and men’s products with similar ingredients on an apples-to-apples basis, we find no evidence of a systematic price premium for women’s products: price differences are small, with women’s products being cheaper in three out of five categories..

The “pink tax” is a myth.

Moshary, Tuchmanand Vajravelu concludes:

These results call into question the necessity and effectiveness of the recently proposed and enacted pink tax bill, which would mandate price parity for substantially similar gendered products.

Yes, that’s true, and it may explain why Attorney General Ellison has remained silent about the “pink tax” for the past five years.

“I always tell women and non-binary people: Feel free to buy the cheap products for yourself that are marketed to men,” said Kara Perez, founder of financial education company Bravely Go. Star TribuneThat’s sound financial advice, but Moshary and Tuchmanand Vajravelu’s research suggests that it’s unlikely that cost-conscious consumers will be able to save that much money: If those bills really were lying on the sidewalk, women would already be smart enough to pick them up.


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