Thursday, March 24, 2005

Price Discrimination Not a Human Rights Violations

Via Sunni and the Conspirators, I found this brief article about gender-based price discrimination in Canada. It refers to charging women higher prices for things such as clothes, shoes, haircuts, and dry cleaning services. A bill that would make this practice illegal and brand it a human rights violation has been introduced to the Ontario legislature.
"The bill would ... amend the human rights code in Ontario to make gender pricing discriminatory and it would also allow for penalties to be levied from C$2,000 to C$5,000," [Lorenzo Berardinetti] said.

The bill -- "An Act to Prohibit Price Discrimination on the Basis of Gender" -- will be debated in the legislature in April in the second phase of a four-stage process toward a bill making its way into law. If it passes a final third reading, royal assent then sees it written into law.
Translation: the helpless women of Ontario need the big protective governement-daddy to protect them from their consumerism. Never mind the fact that they are completely empowered to handle the situation themselves, if they so choose.

I'm a feminist, but I just can't get my thong in a wad over this type of "unfairness". It's just an example of third-degree price discrimination, which is a business' right to implement. Another example would be senior citizen discounts. It's generally not a big deal.

Businesses don't price discriminate because they hate women. Rather, their goal is to charge each customer his/her maximum willingness to pay. Since it is impossible to know this information on an individual level, businesses then try to charge different prices to different segments of the population. Perhaps women in general will pay more for a particular good or service. Those women who won't pay more will have cheaper options in a free market system. (Hey, that's why I shop at Target! It's cheap, and it's an alternative to the evil Wal-Mart.)

It all comes down to the idea of consumer surplus vs. producer surplus. It is reasonable that both will try to get as much of the surplus as possible. When we, as consumers, purchase something for a price much lower than our willingness to pay, we receive all or most of the surplus. So let's assume that the average woman receives greater utility from a pair of shoes than the average man. Now, let's assume the shoes have the same retail price. Who gets the greater surplus? The average woman, of course! Producers know this, and that's why they charge women more money-- to get some of that surplus for themselves.

Sometimes the actual cost of a good or service is higher for a producer to provide for women. Take haircuts, for example. If a woman wants a "woman's" haircut, it's a lot more work and understandably more expensive. If she wants a "man's" cut, she can go to a barber and get a man's price. The two services are not similar enough for it to be unfair to charge different prices.

The specific dry cleaning example from the article does seem unfair. However, state action is hardly called for! In a free market system (or close), women can choose to patron another dry cleaner that doesn't charge them higher prices than men. They can also write a letters of complaint to the business. That is usually effective. Remember, producers will respond to consumer demand.

Why, oh why do some people want the state to solve any problem that may exist? Do we really want to give the state that power, when we are completely empowered to handle the situation ourselves? Many women before me have fought for the right to be independent. But I'm afraid that government has become the new husband.

A lot of men up here have commented that they're willing to pay an extra $4 to dry-clean a shirt if it means women have to pay the extra $150 a month to insure their cars. It certainly works both ways.

You are absolutely right that people have a choice about where they spend their money. But I can completely sympathize with people less crazy than me who don't want to hand-wash all their dry clean only stuff. The practice is so widespread that it can be hard to find someone who doesn't charge men's and women's prices.

... at least with "ladies' night" at a bar, the rest of the week is male/female neutral. There's no "ladies' night" at the stylists, unfortunately. [sigh]
The hypocrisy here is quite apparent. Consumers obviously seek the lowest price possible, without regard for the producer or retailer. To cry foul, in a culture with as many choices as ours is ridiculous. My kids confuse “fairness” at times, but they’re kids!
Just to nitpick for a moment, on dry cleaning. I have to wear slacks, shirts and jackets to work on a daily basis, and/or suits. Now, the reality is that my wool jackets and suits cost me the same, as far as I can tell, as women's skirts and dresses to get cleaned. However, almost all of my shirts are cotton or a cotton blend. They don't require any special laundering, just good ole soap and water. I could wash them at home and press them myself, but I prefer the convenience of cleaner. But most women's blouses I have seen at the dry cleaners were rayon, silk, poly blends, etc. In other words, materials that can't be treated the same way as my cotton shirts. So, it doesn't seem unreasonable to me that women's blouses cost more to get cleaned, if they require different effort and materials.

I live in California, where it is illegal for laundries to charge different prices for similar clothing based on which gender the clothing is for. So, what has happened since that law was passed should be obvious to anyone who understands how this works. The price for getting a woman's blouse cleaned has not gone down. Instead, even though my cotton shirt doesn't require less effort and materials to clean, the price for my shirt has gone up. In other words, the government's intrusion has hurt men and not helped women at all.

You might, of course, take the perspective that it's okay because the oppressors are just getting what they deserve, or they can afford it, or that we men somehow were artificially keeping our prices low. But, what you may fail to see is that by taking extra money from me to clean my shirts you are taking that money from my family budget. My wife is a stay at home mom (by her choice, not mine) and thus my income is all that supports our family. The extra money I now pay for my laundry is money that cannot be spent for other household items or luxuries. You might argue that I should just stop having my shirts cleaned and do it myself, but that isn't a good option because of the nature of my job, where I'm expected to be in a suit or slacks and a jacket because I spend a lot of time with customers. So, what this law that was supposed to help women has done is hurt women, at least one. Nice job.
I wrote: "Instead, even though my cotton shirt doesn't require less effort and materials to clean, the price for my shirt has gone up."

That should have said:

Instead, even though my cotton shirt requires less effort and materials to clean .....
As a generalization, it looks to me like there is more art and effort to cutting a woman's hair than a man's. So there's a reason on the supply side for higher prices. I wouldn't even necessarily agree that this is price discrimination since, generally, what's being sold is actually two different services.
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