Price discrimination based on gender: Sexist or fair?

I see via Stuff that women have to pay more for haircuts.  This is true – in fact there are a number of service related areas where the woman’s version of that service costs more than the man’s version.  Undeniably, we are seeing price discrimination at work.

Now I’m not terribly against price discrimination – if the price discrimination is taking place based on a freely obsevable factor such as sex, then the outcome is efficient … and to be honest, price discrimination is going to become a larger part of our lives over time.  Now this doesn’t mean its fair, or unfair … in order to understand that we have to apply a series of “value judgments” about fairness.

Let’s look at the example of haircuts.  It is true women are charged more than men.  This happens due to women, on average, valuing the service more than men and generally being “less responsive” to the price.  Furthermore, even for the same haircut for a man and a woman, the service offered is not the same – not just because the women values the haircut subjectively “more” but because the physical service that is offered is usually different.

The hairdressing industry is an interesting one as well, it is hardly a place where “competition” issues exist – there are hairdressers everywhere.  As a result, a hairdressers ability to charge a premium above cost is severally limited – although it is the case that women value a haircut more than men, the very competitive nature of the hairdressing industry and the existence of a price gap seems to indicate that the “haircuts” a woman gets costs more than the haircuts a man gets.

If this is the case, I struggle to see how we could view this as unfair.  If we were to “ban” such price discrimination based on sex male haircuts would have to cross-subsidise womens cuts – to me this sounds like much more sexist pricing.

There is also the issue of choice.  Say that, somehow, all the 100 million hairstylists in Wellington were able to inforce an OPEC type relationship – and thereby collude on the price of haircuts to women.  I don’t understand what is to prevent:

  1. Entry of another hairdresser – the fixed costs seem reasonably low.
  2. Women going to a mens barber – a lot of mens barbers in Wellington wouldn’t care … if you were getting the same cut as a guy

I think this specific example shows how careful we have to be about criticising “price discrimination”.  Such discrimination is often a good thing – even given its negative sounding name.

 

  • http://www.tvhe.co.nz/ jamesz

    This post implicitly assumes that an efficient market is ‘fair': the entire discussion about ‘values’ revolves around the competitiveness of the market. I think a discussion of sexism probably needs to be slightly broader to be convincing!

    • http://tvhe.co.nz/ Matt Nolan

      Indeed, I say at the start we need to look in more detail if we are going to discuss sexism through price discrimination.

      I then merely note some of the logical points that come out if we look at one specific example – namely that in the case of haircuts the price different appears to be based primarily on cost differences given it is a competitive industry. Given this, I personally struggle to see how this is unfair – other people may still think it is so, which is their perogative.

  • Kimble

    How much do gay guys pay for haircuts and clothes?

    Boom.

    • http://tvhe.co.nz/ Matt Nolan

      The guys that get the bigger hairstyles do tend to pay more for cuts – that would be a very interesting dataset to look into.

  • ethel the aardvark

    And if you’re a woman who doesn’t value haircuts you grow your hair long and opt out of the haircut market altogether. Cutting my hair in the bathroom mirror seems a lot better value than the money and the time required for a haircut. 

    Though if I got a man price for a haircut I might be tempted to go a hairdresser…

    • http://tvhe.co.nz/ Matt Nolan

       I used to just shave my head thinking it was a bit cheaper – I’m definitely not practical enough to cut my own hair!

      Maybe I should go into a men’s barber to see if they would cut women’s hair!