Have you ever noticed that women’s razors, deodorants, or even basic clothing items often cost more than their male counterparts, despite being nearly identical? This premium, commonly known as the “Pink Tax,” isn’t an official tax, but rather a classic example of price discrimination. While this seems unfair and furthers inequality, from a microeconomics businesses are completely justified.

Price discrimination occurs when businesses strategically charge different prices to different consumer groups based on their willingness to pay. It allows businesses to maximize their producer surplus, which supports the agenda of (assumed-to-be) profit-maximizing producers. In the case of gendered pricing, companies recognize that women, on average, are less price-sensitive when it comes to personal care and hygiene products. In economic terms, women’s demand for these products is often inelastic, meaning they are more likely to continue purchasing despite price increases.

Additionally, businesses reinforce perceived value through marketing, packaging, and branding. A razor with pastel colors and “silky smooth” branding can justify a higher price tag, even if its function is the same as the men’s version. Economically speaking, we could argue this isn’t driven by intentional bias, but rather due to the producers’ profit-maximizing nature.

However, growing awareness has resulted in pushback, with governments worldwide, from France to Canada, introducing regulations to curb gender-based pricing. In 2020, New York State also enacted a law that requires businesses to justify any price differences between comparable male and female products.

So while microeconomics can explain why companies engage in price discrimination, it’s important to note that consumers aren’t powerless. Opting for gender-neutral alternatives and denouncing brands can disrupt the incentives to impose a Pink Tax. Next time you’re shopping, take a closer look at the price tags; maybe knowing the economics behind them might just save you money.

References:

Bhargava, Richa, and Raahat Tara. “Pink Tax: The gender bias in product recommendations and corporate social responsibility.” London School of Economics Blog, 29 Apr. 2022, blogs.lse.ac.uk/humanrights/2022/04/29/pink-tax-the-gender-bias-in-product-recommendations-and-corporate-social-responsibility/. Accessed 8 Mar. 2025.

“Consumer Alert: NYS Department of State Division of Consumer Protection Reminds Consumers that Gender-Based Pricing is Prohibited in New York State.” New York State Division of Consumer Protection, 26 Aug. 2022, dos.ny.gov/news/consumer-alert-nys-department-state-division-consumer-protection-reminds-consumers-gender. Accessed 8 Mar. 2025.

Prasad, Nikita. “Women’s Day? Let’s talk about the unseen cost of being a woman: ‘Pink Tax’— What is it and how can you avoid it?” Live Mint, 8 Mar. 2025, www.livemint.com/money/personal-finance/womens-day-lets-talk-about-the-unseen-cost-of-being-a-woman-pink-tax-what-is-it-and-how-can-you-avoid-it-11741396775926.html. Accessed 8 Mar. 2025.