Pink Tax: The Hidden Cost of Being a Female Consumer
The ‘pink tax’ is a phenomenon often attributed as a form of gender-based price discrimination, with the name stemming from the observation that many of the affected products are ‘pink’ or produced for female consumers. There is a broad tendency for products marketed for women to be more expensive than those sold for men, despite either gender’s choice to purchase either product.
In 2016, an investigation carried out by The Times found that women and girls were being charged on average 37 percent more for toys, cosmetics, and clothes (including school uniforms) than their male counterparts¹. In the same year, Boots (the retail pharmacy) was called out for price-based gender discrimination after a petition accused the company of charging £2.29 for an eight-pack of women’s razors compared to £1.49 for a 10-pack of male razors. A review was carried out, and Boots changed its pricing of some products.
Click to learn more about Wealth8
Pink Tax critics say women’s and men’s razors are essentially the same, and distinguishing between them is simply a marketing strategy. While the physical difference between a men’s razor and a women’s razor is minimal, the difference in marketing those products is immense. Marketers argue that women are less price-sensitive than men, meaning that they are generally willing to pay higher prices than men. Other examples of marketers acting on price discrimination are student or senior discounts, allowing people who are more sensitive to cost to pay less to gain their business.
The reason for campaigning against the pink tax is that it is patently unfair to sell goods and services earmarked for females, at a higher price than those for males, with no underlying economic justification such as higher production costs.
It could also be said that people who have a greater need to buy a product are often willing to pay much more, leading to price discrimination. Women are often subjected to this in the healthcare/personal care sector. Personal care and cosmetic products are seen as products that women absolutely must buy, so they can be priced as high as a marketer would want and would still sell. In this case, women may be considered less price elastic, meaning they care less about the price of a product or service and more about the quality.
Click to learn more about Wealth8
Following in Canada, Australia, and India’s footsteps, on the 1st January 2021 the UK government abolished the tax on women’s sanitary products (a saving of 5 percent), marking a successful conclusion to a 20-year campaign by women’s rights activists. VAT rules had previously categorised sanitary products as ‘non-essential’ and ‘luxury items’.
In a society where women generally earn less but live longer, the reality is that in the long term, they may be left with less to save for the future, and the effect of the pink tax does not help either.
But what can be done? Society continues to challenge retailers effectively on issues as diverse as plastic-free packaging and traceable food ingredients. Similar pressure could help to abolish the ‘pink tax’, which mistreats female consumers.
When investing, the value of your investment may rise or fall and there are no guarantees you will get back all the capital you have invested.