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.