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This is the Cato Daily podcast for Tuesday, May 14,

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2024. I'm Caleb Brown. How should we

0:10

approach the question of the pink tax? The

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notion that women pay more for

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basically identical products and services just

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because they're women. As

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spurred claims of sexism, the

0:21

Cato's Ryan Bourne explores why the pink tax is

0:24

largely a myth in his new book,

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The Quran Prices, is available today.

0:36

I don't know if this is just a myth or

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whether this is just common knowledge,

0:42

which myths often are common knowledge.

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I remember years ago

0:47

a debate online,

0:50

I can't remember where, about the

0:53

prices that men and women pay to

0:56

get their hair done. The

0:59

fights were, well, women are

1:01

more particular than men about how

1:03

their hair looks. Or women have longer

1:05

hair. It takes longer to

1:08

cut a woman's hair.

1:10

Leaving that particular example aside,

1:14

how would we even get at the question of

1:17

whether or not, in a much

1:19

broader sense, women pay more

1:21

for stuff that

1:24

they need, that may be particular

1:26

to their needs than men do?

1:29

Well, you have to do quite

1:31

careful economic analysis. This whole debate

1:33

really erupted in the mid 2010s

1:35

when Bill de Blasio's New York

1:38

City Department of Consumer Affairs ran

1:40

a report in which they looked at 397 pairs

1:43

of items, which they'd identified as

1:45

substantially similar products but marketed towards

1:47

men or marketed towards women. Often

1:50

the products marketed towards women were

1:52

in pink or gendered packaging,

1:55

so hence the term the pink tax

1:57

came about because what they found was

1:59

that on average, whether this

2:01

is looking across adult clothing, whether it's

2:03

looking at children's toys, whether

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it's looking at personal care products. Products

2:08

marketed to women and girls tended to

2:10

be, on average, around 7%

2:13

more expensive than those

2:15

marketed to men. So instantly, everybody said, this

2:17

is sexism, this is discrimination, this is companies

2:20

charging higher markups on

2:22

women. But since then, what we've had is

2:24

economists have come along, and actually it was the

2:27

FTC that commissioned the major study into this.

2:30

And they've looked at the personal care sector where

2:32

you can really kind of break this down in

2:34

detail and said, okay, you've got that crude comparison

2:36

and it looks like women pay more than men.

2:39

But what about if you actually control for

2:41

the ingredients of the products? Because in reality,

2:43

a lot of these personal care products didn't

2:45

have the same ingredients, they didn't have the

2:48

same types of packaging and things. So when

2:50

we control for, say, the main active and

2:52

inactive substances in the product, how

2:54

similar are these products? And then what kind of

2:56

price gap remains? And what they found was, when

2:59

you controlled for those main ingredients,

3:01

genuinely comparing like with like, women's versions were

3:03

only a really slight tad

3:05

above men's on average, and indeed

3:08

in a range of sectors,

3:10

body wash, shampoo and shaving cream, men's products,

3:13

controlling for ingredients were actually more expensive.

3:15

So in short, the big difference, at

3:18

least for personal care items, appears to be that

3:21

women choose different products that have different

3:23

ingredients in them. What conclusions

3:25

can we reasonably draw from that then? Yeah,

3:28

that's a great question. What is it

3:30

about these products that means they

3:32

have inherently different prices? Yes,

3:34

they have different ingredients, but is it that

3:37

women are more loyal to those

3:39

particular items with those ingredients? Is

3:41

it in those particular

3:44

product lines, women's versions have more

3:46

concentration in the market, more monopoly

3:48

power to set higher prices? Or

3:50

is it simply that they're more

3:52

expensive to produce? And there's

3:55

been some interesting new analysis which is kind of

3:57

followed up by two economists from the University of

3:59

California, Berkeley. And they

4:01

do a range of sophisticated statistical

4:04

techniques, but they try and

4:06

find the reason for this. And what they

4:08

find is that women pay higher prices because

4:11

they just seem to prefer products that

4:13

have higher marginal manufacturing

4:15

and distribution costs. So they look

4:17

at five gendered product markets in

4:19

detail, and they find that that's

4:22

true in all of those, in

4:24

all categories, except for one, which

4:26

is protein bars, which weirdly marketed

4:28

towards different genders. I wouldn't have

4:30

thought about that. But how

4:32

do they get to this conclusion? Well, they actually find that far

4:35

from being overtly brand loyal, women tend

4:37

to be, on average, more discerning shoppers.

4:40

They have a broader range of products

4:42

that they buy, and they tend to

4:44

be more responsive to changes

4:46

in price. And actually, the products that

4:48

women buy tend to be in less

4:51

concentrated sectors than men, which is perhaps

4:53

not surprising, given that they're more discerning

4:55

shoppers. So why do they

4:57

tend to pay more? Well, it's because on average, at

4:59

least in this sector, because they

5:01

opt to choose products, perhaps because

5:03

they prefer them, that have higher

5:06

marginal costs of production. So

5:09

you're suggesting, Ryan, that there are

5:11

differences between men and women? I

5:14

mean, on average, we're talking about on average here. And

5:16

one of the interesting things in this

5:18

finding is that women are aware of

5:21

the price differential. So if

5:23

women genuinely, on average, considered

5:26

these men's versions and women's versions

5:28

to be equivalent products, they could

5:31

quite easily choose to buy the

5:34

male version of the products. And if you can't do

5:36

that, obviously, if it's clothing, it's much more difficult to

5:38

do that. But if it's a personal care item that

5:40

you use in the privacy of your own home, it's

5:43

a lot easier. So why don't they do

5:45

that? It must be because inherently, they value

5:48

sensing about the product, the way that it's

5:50

been subtly differentiated in some ways, whether it's the

5:52

scent, whether it's the ingredients, whether it's how they make them

5:54

feel. There's something different about the

5:56

product that means that they're willing to pay

5:59

this higher price. Good Witcher is

6:01

more expensive to produce. It's interesting

6:03

that if a conclusion that we

6:05

can draw from the differentiation and

6:07

pricing between men and women's products,

6:09

he is in parts that women

6:12

are more discerning consumers and more

6:14

sensitive to things like price. That.

6:16

They would be have are more

6:19

likely to purchase. A product

6:21

that was marketed toward men

6:23

if it met their needs.

6:25

As I say, I'm going back

6:28

to the original Stc study. They

6:30

found that actually women could about

6:32

how so diver or could save

6:34

kind of nine percent on the

6:36

spending on personal care products if

6:38

they always opted for products that

6:40

crudely look similar but were marketed

6:42

towards a different gender. Now, once

6:44

you control for the ingredients obviously

6:46

the you know you're looking for

6:48

substantially similar products, the savings are

6:50

much lower. The prices have a

6:52

much closer for substantially similar products

6:54

Been at this, it's. We talking

6:56

about this as if it's an

6:59

interesting intellectual curiosity. But the interesting

7:01

thing here is but California and

7:03

New York as a result of

7:05

this outrageous developed in the two

7:07

thousand and tens of actually introduced

7:09

legislation about this. So you know

7:12

it's illegal for companies operating within

7:14

those states to charge different prices.

7:16

The gendered products that have the

7:18

same materials use his feet is

7:20

brandy and no major difference in

7:23

production techniques Time will cost. Com

7:25

Mouth is. A paradox to that

7:27

type of legislation. obviously because these products

7:29

are subtly differentiated so in reality has

7:31

not been be Maddie products that fall

7:34

foul. Of. That definition but

7:36

my concern he really is the

7:38

as a result of people seen

7:40

products that they think a similar

7:42

but are actually subtly differentiated anna

7:44

way people see that those price

7:47

differences persists Than in future we

7:49

might see a kind of drumbeat

7:51

to tighten that legislation and actually

7:53

apply it to products that that

7:55

seem similar directly god different in

7:58

some ways the I can imagine

8:00

an end Surprising politician. Beating.

8:02

The drum for. To

8:04

demonize some producer of products.

8:07

For. Creating something that

8:09

men want and a different

8:11

product that women want and

8:13

suggesting that know and in

8:15

fact, you're not allowed. To.

8:19

Differentiate products this subtly. they

8:21

need to be more different.

8:23

somehow. Yeah. No, I think that's

8:25

exactly right and that's exactly my fair.

8:27

And of course if you go down

8:29

that route than of produces and just

8:31

not gonna produce the more the put up

8:34

with more expensive to produce so you

8:36

know you end up with less the

8:38

right in the sector And that's one

8:40

big thing I would say about the

8:42

Seen A markets have incentives to the

8:44

extent of people do not want candid

8:46

products At markets have really strong entrepreneurial

8:48

incentives to provide them and indeed durham many

8:50

personal care item companies are were already

8:52

producing kind of generic products that apply.

8:54

To the end of the thing big

8:56

can arrange of others in the late

8:58

twenty ten started out in are going

9:00

down this route at the moment, those

9:03

products and to be tailored as kind

9:05

of premium products but there's no reason

9:07

why not. Is this a high demand

9:09

for for that type of kind of

9:11

branding and production and and unisex use?

9:13

The companies wouldn't go down that route

9:16

in feature and I think this is

9:18

just a really good example I say

9:20

of how you know you can suddenly

9:22

get these panic inherent panics about prices

9:24

and we seen them in in recent

9:26

months of regards to shrink place in

9:29

and reflation and junk phase and things.

9:31

But actually the underlying economics is often

9:33

a lot more complex than the politicians

9:35

give it credit for and us there

9:37

are you know good reasons to explain

9:39

why these products price differences exist or

9:42

even if they're not immediately obvious just

9:44

by looking at the products from a

9:46

distance in a store. So the pink

9:48

tax really is is just one. Of

9:51

the many ways that you approach

9:53

in your new book: the War

9:55

on Prices the the idea of

9:57

the importance of prices, the fact.

10:00

Prices transmit important information that markets

10:02

consumers, producers make use of. and

10:04

you have a lot of other

10:06

essays he in in the book

10:08

as well. This is just one

10:10

of them. Can you walk us

10:13

through at least some of some

10:15

of the highlights. In. The Book.

10:17

Saw. The book is split into three

10:19

chapters say the first, the dress misconceptions

10:22

around the recent inflation the with experience

10:24

and this a couple of great chapters

10:26

in that kind of debunking the idea

10:28

that this was all over so of

10:30

greed, flaxen companies, puffin, their profits from

10:33

Brian Albrecht and also gray essay by

10:35

dated back Worth addressing the idea that

10:37

all of the inflation we just experience

10:39

was a result of inevitable result of

10:41

the pandemic in Ukraine will have. The

10:44

second section of the book is about

10:46

the historic and current use. Of price

10:48

some ways control throughout the economy. There's

10:50

a really good summary essay of what

10:53

we know about run control from Plato's

10:55

Jeffrey Myron of really fun essay about

10:57

price controls for history in the Adam

10:59

Smith and Streets I'm I'm I'm Butler

11:02

and the i'm quite innovative essay actually

11:04

of about the ways that companies are

11:06

just minimum wages. Other them by adjusting

11:08

the number of jobs in the in

11:11

the Company from Jeffrey Clemens is an

11:13

academic economists than the final section really

11:15

is about the morality of prices and

11:17

value. So that's where my essay on

11:20

the Pink Tax fits in A very

11:22

good Us Safe from Vanessa Brown, Kudo

11:24

from Keto on the gender pay gap

11:26

and it's and really decent. essays from

11:28

Daydream Mikulski our colleague here on the

11:30

morality of market prices as well. Right

11:35

born his editor of the new Keto

11:37

book, the War on Prices available today.

11:39

Get your copy at Quito Outward. Subscribe

11:42

to and rates to Keto Daily Podcast

11:45

anywhere you like. And thank you for

11:47

listening.