Gender-Based Pricing in Consumer Packaged Goods: A Pink Tax?

Abstract

This paper investigates a controversial application of a textbook pricing practice: gender-based price segmentation, which has allegedly created a pink tax, whereby products targeted at women are more expensive than comparable products marketed toward men. Our results shed light on the form and magnitude of gender-based pricing for personal care products. We find that gender segmentation is ubiquitous, as more than 80% of products sold are gendered. Further, we show that segmentation involves product differentiation; there is little overlap in the formulations of men’s and women’s products within the same category. Using a national data set of grocery, convenience, drugstore, and mass merchandiser sales, we demonstrate that this differentiation sustains large price differences for men’s and women’s products made by the same manufacturer. In an apples-to-apples comparison of women’s and men’s products with similar ingredients, however, we do not find evidence of a systematic price premium for women’s goods: price differences are small, and the women’s variant is less expensive in three out of five categories. Our findings are consistent with the ease of arbitrage in posted price markets where consumer packaged goods are sold. These results call into question the need for and efficacy of recently proposed and enacted pink tax legislation, which mandates price parity for substantially similar gendered products.