Wednesday, January 23, 2013

Why Charge More for Women's Haircuts?

Some of the repetitions of  the initial news reports of the ruling by the Danish Board of Equal Treatment that men's and women's haircuts would have to be priced equally had a sub-text of 'those crazy Scandinavians are at it again' about them.
'It takes, quite simply, longer time with women,' said Connie Mikkelsen, chairwoman of the Danish organisation for independent hairdressers and cosmeticians.

But Alex Hern of the NewStatesman did the 'hard work' of actually reading a translation of the ruling. It turns out the ruling is due to a complaint from "a woman with a short, boyish haircut, who was nonetheless told she would have to pay the price for a 'woman's haircut.' " The facts appear to be a little more subtle than they seemed at first blush. The woman was being charged more for being a woman, not for having long hair. This would be 'gender discrimination.' But what is in it for a hairdresser to engage in gender discrimination?

It could be gender bias, essentially mere bigotry. It seems quite likely, though, that there are significant differences between men's and women's cuts that are independent of hair length. These differences could be based on costs (on average, even women's boyish cuts take longer than boy's cuts) or based on customer value (on average, women care more about a good cut than do men).

Regulating price equality has a few pernicious effects:

  1. If the difference is cost based, then price equality codifies an inefficient distortion. Markets abhor a distortion. We would expect innovations to surmount the distortion. Perhaps hair dressers refuse male customers so as to charge higher prices to high cost women. Perhaps less time is spent on women making their cuts  less stylish. Perhaps the shops absorb the hit, become less profitable and the marginal shop closes.
  2. Suppose it was value based. Without going into detail, Hal Varian showed us that price discrimination usually increases social welfare because more of the good is exchanged. The alternative single price is a single monopoly price.
  3. Suppose it was a mere bigotry against women. Price equality could rob women of the most important weapon they have to fight discrimination: choice. If the higher price was simply due to a bias against women, then price equality would not inform women who held this bias. They would keep patronizing bigots and bigots would suffer no consequences of their bigotry. It robs unbiased entrepreneurs of the opportunity to undercut these prices and drive biased hairdressers out of business. The greatest threat to bigots is having to compete with non-bigots.


2 comments:

  1. I found this article to be very interesting. Until now, I have not even given a second thought to the price discrimination as identified by the difference between a man’s haircut and a woman’s. It made me think about where is there more evidence of price discrimination based on gender.

    I discovered the following areas that exhibit price discrimination depending on the gender of the customer: Long-term heathcare; Car Insurance; Nightclub and Bars; Beauty Products; Nail Salons; New Cars and Their Parts; and, Dry Cleaning. (Gold, 2014)

    According to the article by Hannah K. Gold, the price discrimination is based on a number of different variables. Studies have shown that long-term healthcare is more expensive for woman because woman tend to live longer than men. Women are offered deals when shopping for car insurance because woman drive less and are involved in less accidents. Nightclubs and bars promote “Ladies Night” by offering women discounted drinks and cover charges in efforts of luring just as many more men customers as women. Men are charged more at nail salons because their hands are larger, rougher and take longer to groom then women’s hands. At the car dealerships, women usually pay more because of their lack of knowledge of the market. Dry cleaners are taking the stance that a woman’s blouse is more detailed therefore requiring more attention than a man’s shirt.

    So, although these industries are obviously benefiting from gender discrimination, they all have valid arguments supporting their reasoning behind price discrimination.

    References:
    Gold, H. K. (2014). 8 Things That Cost More Based on Whether You’re a Woman or a Man | Alternet. Retrieved March 19, 2015, from http://www.alternet.org/gender/8-things-cost-more-based-whether-youre-woman-or-man

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