Gender-based price discrimination

Gender-based price discrimination is a type of economic discrimination that consists of the practice of charging one gender a different price than another gender for identical goods or services.^[1] It is a subcategory of price discrimination, which also includes race and class-based price discrimination.^[1] Further, "discrimination" often evokes a legal connotation, but in this context, gender-based price discrimination is often studied by examining gendered price disparities.^[2] Whether gendered price disparities prove an intent to discriminate or an illegal discrimination is a legal inquiry determined by the law of the applicable jurisdiction.^[2]

Typically, price disparities negatively affect women more often than men. A study of gendered pricing in New York City by the New York City Department of Consumer Affairs found that, on average, women's products cost 7 percent more than similar products for men.^[3]

Gender-based price disparities have been shown to exist in several different markets. This includes personal care products, retail sales, and consumer service prices.^[1] Gender-based price disparities also exists in the pricing of insurance, such as health insurance and car insurance in the United States.^[1] Research also suggests that gender-based price disparities often occur in the context of negotiating and purchasing new cars.^[2][4][5]

Discount prices based on gender may also be viewed as a type of gender-based price discrimination. A common gender-based price discount is the "Ladies' Night" promotion, in which female patrons pay less than male patrons for alcoholic drinks or cover charge.^[6][7]

Consumption taxes on certain products have also been viewed as leading to gender-based price disparities. For example, in the United States, Australia, and the United Kingdom, tampons are often subjected to a consumption tax, while other products such as condoms, lubricant, and several other medical items are exempt from the tax.^[8][9][10]

Gender-based price discrimination is typically disapproved of, but this sentiment is not universal.^[11] In the United States, a few states have adopted statutes forbidding gender-based price discrimination, but these policies are largely unenforced.^[11]

Debates

Gender-based pricing exists in many industries including insurance, dry-cleaning, hairdressing, nightclubs, clothing, and personal care products.^[6] The legality of gender-based price discrimination in matching markets has been of debate in the United States and European Union since the 1990s.^[6] The debate is centered around whether gender-based pricing is a form of gender discrimination. Instead of a market-based analysis of the effects on competition, the debate of gender-based pricing concerns the reinforcing of negative stereotypes about both women and men in matching markets.^[6]

In the United States

In the United States, gender discrimination more generally is a matter left to the states (see federalism in the United States).^[6] As a result, there is considerable variation on the legality of gender-based pricing.^[6] For example, courts in California, Florida, Pennsylvania, Iowa, and Maryland have consistently ruled against gender-based pricing.^[6] While other courts in states such as Illinois, Washington (state), and Michigan, have adopted a case-by-case approach on the issue.^[6] Opponents of the enforcement of gender-based price discrimination argue that courts should dismiss cases involving gender-based pricing because the injury to the plaintiff is inconsequential such that they should not be entitled to relief.^[6] Often opponents will also point to economic efficiency as a justification for gender-based pricing, however, it is inconclusive as to whether gender-based pricing is more efficient.^[6] In response to the economic efficiency argument, scholars suggest that gender-based pricing should be prohibited on moral grounds.^[6][12] Stating that gender should not be used as a proxy for other characteristics, especially when it is based on stereotypes.^[6][12]

In the European Union

The framework for assessing gender-based price discrimination in the European Union is provided by Directive 2004/113/EC.^[6] The Directive, however, has had a limited impact and very few cases have been brought in connection with it.^[6] This is most likely because few people are aware of the Directive and in most cases the damage incurred by the plaintiff is less than the cost of litigation.^[6] Additionally the language of Article 4.5 is particularly ambiguous. Gender-based pricing under this article is legal if it aim "primarily" to attract men or women, who otherwise would not have joined or used the service. "It implies that it is legal to subsidize men for attending a course on parenting, for example. It is, however, illegal to subsidize women for joining a club or a dating website."^[6]

Gendered Price Disparities

Gender research has heavily focused on the interaction between gender and the economy.^[1] Typically, research in this area involves the issue of the gender pay gap.^[1] Another aspect of gender research in economics is the less studied issue of gender-based price disparities in the cost of goods and services across different industries.^[1] Scholars suggest that the existence of gendered price disparities contribute to gender inequality by creating an economic burden that does not exist for the other gender and by reinforcing gender roles in the marketplace.^[1]

Personal care industry

There are a number of different studies on the price disparities between personal care products and services that are marketed towards females and males. For example, the New York City Department of Consumer Affairs (DCA) conducted a study of prices of goods in New York City across five industries, including personal care products.^[3] Other universities and academics have also studied the prices in personal care products and services, such as the University of Central Florida.^[1]

Personal care services

A recent study titled Cost of Doing Femininity suggests that differences between prices in personal care services are not uniform across all services.^[1] This study chose two areas of service that were directly comparable: hair salons and dry cleaners.^[1] The sample of both hair salons and dry cleaners was taken from yellow page listings for zip codes in a four county metropolitan area in the southeastern United States with a population of over 2 million.^[1] Of the salons surveyed, none of them offered a lesser price to females and only 15 had the same prices for both genders.^[1] The average price for a standard women's haircut was $35.02, while the average price for men was $22.78.^[1]

Personal care products in New York City

According to the DCA study, across five industries (toys and accessories, children's clothing, adult clothing, home health care products for seniors, and personal care products), personal care had the highest disparities for women.^[3] Personal care products for women cost 13 percent more than personal care products for men.^[3] Additionally, the DCA found that personal care products for women were purchased more often than other consumer goods. Therefore, a 13 percent difference in pricing leads to a "significant financial burden" for women over a lifetime.^[3][13][14] The largest price disparity was found in hair products.^[3] Hair care products for women cost 48 percent more than for men. While the second largest price disparity was in razor cartridges, costing women 11 percent more.^[3]

Hair Care Industry

Price disparities in hair salon services between men and women is thought to be justifiable because women's hair is often longer and more complicated to maintain and cut.^[15] In recent years, however, this stereotype has changed.^[15] Men are often trying new things with their hair, including hair loss treatment and hair color.^[15] While women may still spend a considerable amount for hair color and other treatments, many women prefer basic haircuts.^[15] Additionally, salon-quality hair styling tools are readily available and easy to use at home.^[15]

Gendered price disparities for hair salon services has also been documented in different locations across the United States and Europe. The California Assembly Office of Research conducted a survey of five large California cities and found that forty percent of the hair salons charged women five dollars more than men for a standard haircut.^[16] Gendered price disparities in haircut prices also has been found in New York City: Of 199 hair salons examined, nearly 48 percent of hair-cutters charged women more than men for a simple haircut.^[1] In a survey conducted by Catherine Liston-Heyes and Elena Neokleous in the United Kingdom, it was found that women pay an average of 10 pounds more than men.^[15]

Car Price Negotiations in the United States

For most Americans, new car purchases are their largest consumer investment after buying a home.^[2] In 1991, Harvard Law Professor, Ian Ayres, examined whether the process of negotiating for a new car disadvantages women and minorities.^[2] The study was conducted in the Chicago area and involved 180 price negotiations at 90 dealerships.^[2] The study's testers included individuals of different races and genders and each was instructed to use the same negotiation strategy.^[2] The results of the study concluded that white males received significantly better prices than non-whites and women.^[2] For example, white women had to pay forty percent more than white men. Additionally, black women had to pay more than three times that of white men.^[2]

Law and Policy in the United States

There is no legal standard for claims involving "subtle and unconscious" discrimination.^[2] Further, there is no specific federal law that prohibits gender-based price discrimination.^[2][17] There are, however, states and localities that have enacted laws and policy prohibiting gender-based price discrimination in public places such as nightclubs and bars.^[7][17]

California

In 1995, California became the first state to enact a bill to protect consumers from gender-based price discrimination for services under the Unruh Civil Rights Act.^[18] California Assemblywoman Jackie Speier introduced the Gender Tax Repeal Act to “try to address the persistent problem of gender-based discrimination in the sale of services related to haircuts, laundry, dry cleaning, and alterations.”^[19] The law was enacted to prohibit businesses from charging different prices for services based on a customer’s gender.^[20] The Gender Tax Repeal Act provided for civil actions in which courts may award a minimum of $1,000.00 or up to three times the amount of actual damages in addition to attorney’s fees.^[21] The enactment of the Gender Tax Repeal Act aided in combating gender-based price discrimination in the pricing of services, but did not prohibit such price differentials with respect to products.

On January 21, 2016, California Senator Ben Hueso introduced Senate Bill 899^[22] to extend prohibiting gender-based price discrimination for services to products.^[23] Senate Bill 899 proposed to prohibit businesses from price discriminating with respect to goods of “similar or like kind” based on a customer’s gender. On March 31, 2016, Senator Hueso introduced amendments clarifying that businesses may charge more for a product if there are legitimate differences in costs of labor, materials, or tariffs.^[24] The amendments also clarified that “substantially similar” products included products of the same brand, share the same functional components, and share 90 percent of the same materials and ingredients.^[24] Senate Bill 899, sponsored by Consumer Federation of California, received support from the American Civil Liberties Union of California, California Public Interest Research Group, Planned Parenthood Affiliates of California, and Women’s Foundation of California.^[24] On April 12, 2016, the Senate Judiciary Committee voted 5-1 in favor of Senate Bill 899 and will advance the bill with a Senate Hearing.^[25]

Miami-Dade County, Florida

In 1997, Miami-Dade County in Florida passed an ordinance prohibiting businesses from charging different prices for products or services based solely on the customer’s gender.^[26] However, under the ordinance, a business is permitted to charge a different price for products or services if it involves more time, difficulty, or cost. Miami-Dade County’s ordinance also permits limited legitimate discount programs based on gender.^[27] For instance, a business may advertise, “Ladies Free on Friday Night”, as long as men are not prevented from patronizing the business.^[28]

New York City, New York

In 1998, New York City Council passed a law prohibiting gender-based price discrimination for services.^[29] However, the law did not address gender-based price discrimination for products. The law added a section of the New York City Administrative Code, enabling the DCA to issue violations to dry cleaners, hair salons, and any “retail service establishment” that priced services based on a customer’s gender. Under the law, a business’s posted prices must reflect actual differences in the required labor. For example, a dry cleaner’s price list must describe the difference between garments (i.e. shirts with ruffles) that require additional labor to dry clean, rather than using the terms shirts and blouses, which are inherently gender-based. In 2014, the DCA issued 118 violations to businesses in violation of New York City’s gender pricing law.^[30] In 2015, the DCA issued 129 violations.^[30]

References