Sexist Prices?

The New York City Department of Consumer Affairs compared nearly 800 products with female and male versions — meaning they were practically identical except for the gender-specific packaging. .. Controlling for quality, items marketed to girls and women cost an average 7 percent more than similar products aimed at boys and men. .. Compounding the injustice .. is the wage gap, .. women in the United States earn about 79 cents for every dollar paid to men. .. The largest price discrepancy emerged in the hair care category: Women, on average, paid 48 percent more for goods like shampoo, conditioner and gel. Razor cartridges came in second place, costing female shoppers 11 percent more. (more)

Stores: 24, Brands: 91, Product Categories: 35. .. Selected products that had similar male and female versions and were closest in branding, ingredients, appearance, textile, construction, and/or marketing. (the study)

There is a huge literature on gendered wage differences, but far less attention to this question of gendered consumer price differences. Maybe people avoid this question out of fears that their answer will sound sexist. So maybe it takes a brave (= insensitive) guy like me to dive into it.

So let’s try to list the possible theories. First, some people seem to think that firms purposely raise prices on women just to be mean to women, or kind to men. But I’m pretty sure that the vast majority of economists will reject this theory. Firms might all be making the same mistake on how to maximize profits, but even then we’d want a story about what they are thinking. And given the lack of firms trying to profit via contrary assumptions, most economists will find it hard not to share the beliefs of most firms on what increases firm profits.

So, what could firms be thinking? Well one obvious hypothesis is that the study cited above fails to control for enough relevant features of quality. That is, maybe even though these products looked similar, they actually were made with different materials, to different standards of reliability, with different degrees of product marketing and other supports. For example, maybe women tend to return and exchange their products more often. But I’ll give these study authors the benefit of the doubt here.

Another obvious possibility is that these 800 products are not representative of the larger space of products and services. The study authors could have selected products to get the answer they wanted. And products where it is plausible to have two closely related versions targeted to different genders must be more intrinsically unisex than other products. Bras and condoms, for example, wouldn’t qualify. However, even if these products aren’t representative, we still want a theory of why prices correlate with gender within this category.

In economic terms, two obvious types of causes of price differences are elasticity of demand and product quantity. That is, within this category of products profit-maximizing prices could be higher for women either because women are less price sensitive than men, or because fewer items can be sold of female product versions, forcing each item to cover a larger fraction of the product’s fixed costs. Fixed costs can include costs of design, testing, manufacturing, distribution, or marketing.

First, women could just have a higher preference for quality. Even if these pairs of products are actually the same quality, women may have assumed that the female versions are higher quality because products targeted at women tend in general to be higher quality. Also, a stronger preference for quality could tempt firms into increasing prices because consumers often infer that higher priced products are higher quality. Perhaps women also have a greater tendency than men to infer quality from price.

Second, women might be less aggressive in searching for lower prices for similar products and in switching when such prices are found. Women might instead be more loyal to prior suppliers and brands, and feel worse about betraying previous brands by switching.

Female versions of products might sell fewer units because women just buy fewer of the sorts of products that have similar male versions, because women are buying more of other kinds of products instead. This might be because women have a great taste for product variety, i.e., for products that are more closely tuned to their particular needs and wants. (Here variety is a kind of quality.) It might be because women tend to see more differences between products, relative to men who see fewer differences. Or it might be because women are actually more different from each other than men are from each other, at least regarding the features relevant for these products.

OK, but which of these theories are most true? I’d guess women actually do tend to have a higher taste for quality and variety within this category of products. But I still doubt that women have higher taste for quality and variety overall. Instead it seems to me that the sorts of products that can have similar male and female versions tend to be lower-quality less-varied more-commodity-like sorts of products.

Women could have a higher taste for quality among lower quality products, and still have the same overall taste for quality, if women have less tolerance for variation in quality across product categories. That is, men may be more willing to save via lower quality in some areas, in order to pay for higher quality in other areas. In contrast, women may seek a more consistent level of quality across many product categories. Women may be more afraid someone will judge them badly from one particular unusually low quality category, while men may hope someone will judge them well from one particular unusually high quality category. This theory fits with many other results suggesting that men are and seek higher variance, and have less conformity.

Is my theory sexist? Honestly, I don’t know how to tell. As far as I can tell a claim is most prototypically “sexist” when it posits women as being lower in some nobility ranking than men. So it depends a lot on what features you consider noble. Many see conformity as ignoble, but I’ve blogged often against that view. I don’t see myself as being sexist here, but others may see it differently; maybe posterity can decide.

This post benefited from a lunch conversation with Tyler Cowen and Bryan Caplan.

Added 6:20p: Tyler Cowen riffs, offering a more readable “generalization” of my theory.

Added 6:30p: Anamaria Berea notes that women more often buy for men than vice versa. So the relevant difference could be less actual difference in men versus women than a difference in how women see others vs themselves.

Added 27Dec: Another simple story is that each gender has higher willingness to pay for quality and variety in that gender’s traditional area of specialization. Perhaps this price comparison survey had more items from traditional female than male areas.

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  • http://juridicalcoherence.blogspot.com/ Stephen Diamond

    Maybe people avoid this question out of fears that their answer will sound sexist.

    There are plenty of ways to “sound sexist” when discussing wage differentials. (That is to say, your theory about the gendered price differentials makes sense to me, but your theory of why the topic is avoided doesn’t.)

    I think the reason the topic is avoided is probably “sexist,” judging by my own reflexive reaction: if female-gendered products are too expensive, buy the male version.

    Perhaps the very existence of all these gendered products is what’s really sexist.

    • sabril

      “if female-gendered products are too expensive, buy the male version.”

      I think your typical girl walking down the street doesn’t really care that much. It makes her feel good to buy and use pink razors and she’s willing to pay extra to do it. Especially if it’s her husband or father or predominantly male taxpayers in general who are ultimately footing the bill.

  • badpowers

    Isn’t there an extremely obvious answer here? Masculinity is centered in Western culture. Women can use men’s products, from earplugs to disposable razors. But men would seldom use women’s products. This would tie into one explanation you don’t explore above: “fewer items can be sold of female product versions.”

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      It’s interesting how ambiguous are the circumstances leading to accusations of sexism. Is it sexist to encourage separate women’s products when one version would do? Or is it sexist to avoid promoting the female identity?

      • Dave Lindbergh

        Yes.

      • oldoddjobs

        Everything is sexist. Merry Christmas.

      • sabril

        “sexist” = “does not unequivocally favor women”

        I remember reading about a feminist complaining that average Medicare spending per year was greater for men. But when you think about it, this is simply because (1) on average, women live beyond age 65 more years than men; and (2) Medicare tends to spend a lot of money in the person’s last year of life.

        Ultimately I think it’s the same with these sort of price discrepancies. Our culture believes that women should have nicer stuff than men. And a lot more money is spent on womens’ products than mens’. Which is fine, but this will tend to push up prices for womens’ products.

      • IMASBA

        Depends on which school of feminism you ask. Whatever position you take in these matters, there will always be some (splinter) group accusing you of sexism. It’s really like asking a bunch of christian and muslim scholars how many angels fit on the head of a pin.

  • Dave Lindbergh

    Women are smaller than men, on average.

    If the authors measured price per unit size, or per unit weight, and the items meant for women were smaller (serving of food or drink, shoes, clothes, tools, etc.), yet priced identically, that would explain it.

    • http://overcomingbias.com RobinHanson

      That is clearly not what is going on here.

      • Dave Lindbergh

        Maybe not, but I don’t think anything in your summary rules it out.

        (I didn’t read the paper.)

  • Highgamma

    One area that should be examined is the prices that they are using. They appear to be using list prices, i.e., no discounts, sales, etc.

    A possible theory is that women are more subject to standard forms of price discrimination (coupons, sales, seasons) than men. Since we don’t see quantities traded at the list price, we have no way of knowing if the price discrimination is based upon high-willingness-to-pay women being charged more of a differential over low-willingness-to-pay women than is true for high- versus low-willingness-to-pay men. The male aspect may just be a sideshow.

    More anecdotally, my wife stocks up on shampoo for her and the girls when there’s a sale. I buy the cheapest available shampoo when I run out of the little bottles that I took home from the hotel (and I don’t want to smell like a flower. Yes, I have used my wife’s shampoo.). I don’t know if my wife has ever paid list price for many products. I can’t remember the last time I used a coupon.

  • J.K.

    Couple of thoughts:

    1: There aren’t that many things that are specifically targeted towards men with an essentially identical item being targeted towards women. Some personal care products are like that, but not many. So I am really suspicious of their claim of 800 products (I bet it is a bunch of different brands of a small set of products). What there tends to be instead is a unisex version and a female version. In those cases, the female version being more expensive makes rational economic sense as it is providing an extra ‘feature’, even if it is only signalling.

    2: Women actively dating or in relationships tend to be economically subsidized. This will also encourage them to not be as aggressive on shopping by price.

  • Salamander

    My guess is that women who buy gendered razors/toothbrushes/pens are more quality-focused and less frugal than the general female population. On the other hand, I think your post and several of the comments are unduly suspicious of a study that, from my perspective as a female shopper, only seems to confirm the obvious (and irritating). Occasionally very irritating: I imagine I feel roughly the same about having to go to the men’s aisle for my razor blades as most men would about having to visit the tampon aisle for theirs. I could buy nearly identical ones in the women’s aisle, but they cost more. That does seem a bit unfair. (And, of course, very intentional and smart. Every time I get conned into paying more for a gendered product (q-tips in a pink package is an excellent example), I can’t help but think, “Target, you magnificent bastard.” )

  • sabril

    It’s interesting that many of the goods at issue are children’s products, particularly children’s clothing. With children’s clothing it’s normally a woman who is buying the goods whether it is for a male or female child. So I don’t think it’s just a matter of female shoppers being more interested in quality or perceived quality, being more loyal, etc.

    I do know, from simple observation, that parents, especially mothers, seem to like the idea of buying cute clothing for their daughters. More so than for their sons. And this idea continues as the children grow up: Parents (correctly) assess that for social reasons, it’s more important for their daughters than for their sons to wear nice clothing to school; to have nice haircuts; etc.

    And this pattern continues into adulthood. There are just a lot more consumer goods aimed at female consumers than male. It’s interesting that there is a whole chain of stores dedicated to girls’ underwear (Victoria’s Secret) with essentially no equivalent for men. Even outside of clothing, there are a lot more grooming and beauty products aimed at female customers.

    So my WAG is that there is simply more consumer demand; more dollars chasing consumer goods for females; so there are more people willing to pay a premium; so prices are higher.

    That said, the study in question probably exaggerates the discrepancy by categorizing some unisex products as male. I haven’t looked at it carefully, but I wouldn’t be surprised if there are some apple/orange comparisons. For example, since mens’ clothing is less fitted, it’s probably cheaper to make in terms of sizing.

  • IMASBA

    A while back I had to do an analysis of clothing prices across tens of thousands of products. I found that something like two thirds of all clothing was geared towards women, the rest to men or children. The effect on pricing (measured in terms of the most discerning features for a random forest model) of the clothing being geared towa men or women was close to zero once I corrected for clothing type, print and fabric. Of course these results only apply to clothing types that are unisex: it may well be that skirts are much more expensive than men’s jeans. Shoes were not included because EU-cpi regulations classify shoes separately from clothing.

    I think women are willing to spend more on products that allow them to physically stand out (make up, non-unisex fashion, extravagant shampoos, creams, perfumes, etc…) Men are usually willing to spend more on cars, computers, etc… Typical status increasing stuff both sexes.

  • Rafal Smigrodzki

    Is it important if a theory is “sexist”? Isn’t it more important that it is true?

    The mere fact that a male tenured economics professor feels the need to preemptively defend himself against charges of sexism on a blog makes me worried that there might be a lot of sexism aimed against male economics professors.

    That can’t be good for the enterprise of finding truth in economics.

  • Viliam Búr

    My guess is that women have higher preference for buying a gendered product (as opposed to a gender-neutral product, not the product for the opposite gender).

    Imagine that there are three identical products, different only in packaging: gender-neutral P0, marketed to men PM, and marketed to women PW. My guess is that a man is more likely to go “either P0 or PM, whichever is cheaper”, but a woman is more likely to buy PW. Therefore the price of PW can be slightly higher than P0, but the price of PM must be comparable with P0.

    This is a testable hypothesis, if someone can find the complete sets (P0, PM, PW) and compare the prices of all three.

  • https://www.facebook.com/app_scoped_user_id/1026609730/ Jim Balter

    “some people seem to think that firms purposely raise prices on women just to be mean to women, or kind to men”

    No they don’t. You clearly have never read ANY of the extensive literature on this subject and what explanations have been offered, so your attempt to “try to list the possible theories” is pathetic.

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      When Hanson says “theories,” he really seems to mean possible flaws in the study. It is a bit confusing. Hanson:

      So, what could firms be thinking? Well one obvious hypothesis is that the study cited above fails to control for enough relevant features of quality.

      Robin’s “obvious hypothesis” really has nothing to do with “what the firms could be thinking.”

  • brendan_r

    I remember when I was a kid paying twice as much for Topps basketball cards from a cigar shop instead of CVS because the cigar shop was “lucky”.

    I remember also feeling as if there was something magical about beanie babies, because they were rare or something, compared to other almost identical toys.

    Pure examples of paying up, delusionally, for something of no intrinsic value.

    Nowadays I fight with my wife because I want to buy generic everything – toothpaste, clothes, soda, etc. I want to kill her for buying bottled water but she swears it tastes different.

    Everyone knows you can rip kids off in the way I describe.

    And I think most people know women tend to be easier to rip off – to get to value something illusory – than men too.

    There are a variety of reasons I think. Partly it’s because of greater fashion consciousness – something everyone should be aware of. Lesser appreciated I think is female risk aversion.

    The small risk that generic aspirin, slippers, or tap water might be not as good as the real thing bothers them more; you see the same thing in eagerness to go to the Doc to for sniffles – just in case!

    Sensitivity to fashion (conformity) + risk aversion.

    This is the sort of thing that’s not obvious only because you’re not supposed to notice how obvious it is.

    (By the way, don’t buy $15 WalMart shoes if you’re active – they disintegrate!)