Understanding the Pink Tax and Pinkflation (Note)

Summary:

• The pink tax refers to a systematic price difference between products and services intended for women and those intended for men, even when they are similar in terms of quality or function.
• Pinkflation reflects a disproportionate increase in the prices of goods intended for women, amplifying their consumption costs in times of inflation, with price differences of up to 46% for similar services. In the United States, the pink tax represents an average additional annual cost of $1,300 for women.
• A study of six European countries shows that households headed by women are sometimes less exposed to inflation (Germany, Finland) or more exposed in specific contexts, such as high-income households in Portugal.
• The composition of consumer baskets plays a central role in inflation-related cost inequalities, as women tend to favor products that are less prone to sharp price increases.
• Despite media attention on the pink tax, data and studies on gender differences in consumption and inflation are still limited, highlighting an urgent need for further research to guide public policy.

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The pink tax refers to the almost systematic price difference between products and services intended for women and those intended for men, even when the items are comparable in terms of quality or function.

This phenomenon is not limited to a simple price difference between similar products; it also encompasses a disparity in the composition of consumer baskets. In fact, women not only end up paying more for products similar to those purchased by men, but also include products that are more exposed to inflation in their everyday consumption, a phenomenon known as « pinkflation. » This term refers to the disproportionate increase in the prices of goods intended for women, often without valid justification, but which contributes to the overall increase in costs for women.

This note provides a state-of-the-art review of research and data on this pink tax, which, although significant in terms of its weight in female consumption, remains relatively understudied. We will first address the price differences between items common to male and female consumption baskets, highlighting products exposed to the aforementioned « pinkflation. » We will then explore the disparities between male and female consumption baskets to analyze how these price differences manifest themselves in women’s overall spending.

Goods and services that are unfairly more expensive for women

Goods and services subject to the pink tax include a wide range of everyday consumer products, such as personal care items (deodorants, shower gels, and shampoos), clothing, feminine hygiene products, and certain services such as haircuts, laundry services, and even car repairs.

Staying with the topic of personal hygiene, let’s now turn our attention to hairdressing. In 2018, the association Consommation, Logement et Cadre de Vie (Consumption, Housing and Living Environment) highlighted price discrimination in hair salons, where the prices charged to women were systematically higher than those charged to men. According to a survey of 902 salons, a « shampoo, cut, blow-dry/styling » package for similar hair lengths cost an average of €30.07 for women, compared to €20.46 for men, a difference of more than 46%. The pink tax in hairdressing has its origins in the practice of setting, a technique that has long been associated with women’s haircuts. Historically, this method required considerable time under a heated hood to set the hair, which justified higher prices for women than for men.

The pink tax applies from an early age, with price differences between toys for girls and toys for boys. An American study found that toys for girls cost on average 5.5% more than those for boys. The example below highlights a price difference of €3 for two children’s watches, the only difference being the color. The same is true for girls’ clothing: in 2021, for example, it was shown that girls’ uniforms were on average 12% more expensive thanboys’ uniforms in the United Kingdom.

The specter of the pink tax extends far beyond these two examples. According to a study by the US Government Accountability Office, women’s clothing costs on average 8% more than men’s, and feminine hygiene products, such as the deodorants and shower gels discussed above, can be 13% more expensive. The study also shows that women paid up to 7% more than men for their car insurance premiums. This difference persists even though women, on average, are considered less risky drivers than their male counterparts, suggesting that insurance companies charge women higher rates because of gender stereotypes, not actual risk analysis. Dry cleaning services also illustrate this pricing disparity.

It has been estimated that the pink tax represents an average additional cost of $1,300 per year for women in the United States. This amount represents the extra money women pay for everyday consumer products such as clothing, personal care products, and toys, as well as for services such as haircuts and car insurance.

This « pink tax » is dynamic in nature. It can decrease or increase from one period to the next, as shown, for example, in an article in the British media outlet New Statesman, which suggests that prices for men’s products were less subject to inflation than women’s products between June 2020 and June 2021 in the United Kingdom (this increase in the pink tax is called « pinkflation »). The most striking finding concerns shoes: between June 2020 and June 2021, the price of shoes increased by +76% for women compared to +14% for men. The price of feminine hygiene products (particularly sanitary pads) also tends to increase dramatically during periods of inflation.

Different baskets of goods and exposure to inflation

Women therefore pay more to have access to a basket of goods equivalent to that of men. However, to gain a comprehensive perspective on consumption inequalities between men and women, it is important to consider not only price differences, but also differences in the composition of a basket of goods. Different baskets of goods, even if they only contain items that are not subject to the pink tax, give rise to exposures to inflation that can be radically different.

Let’s take a simple example to explain this issue of differentiated inflation impact (see table below). There are three types of expenditure: housing, food, and tobacco. We consider two types of households: women living alone and their male equivalents. These two types of households spend the same amount, but their consumption baskets differ: for men, tobacco-related expenses are relatively higher than the average household. The opposite is true for food expenses for women. However, inflation for these two types of goods is different: tobacco has experienced higher inflation than food.

Inflation is calculated as the average increase in prices for each type of good, weighted by their share in the average basket. In our example, inflation therefore amounts to +3.25%[1]. However, the real impact of inflation on men and women is significantly different here, due to the different composition of their baskets of goods: men spend more on tobacco, which has experienced particularly high inflation. Thus, if men want to maintain their basket of goods, they will have to increase their spending by 3.7%, whereas women will only have to increase their spending by 2.8%. This represents a difference of 90 basis points. This difference can be broken down into two sources: women spend relatively more on food, a type of good whose inflation is lower than the average inflation, which automatically lowers their average exposure to inflation compared to men (by 22.5 basis points).[2] Similarly, they spend relatively less on tobacco (which has higher-than-average inflation), which also lowers their average exposure compared to men (by 67.5 basis points).[3]

Unfortunately, there are few studies on the subject due to a lack of data detailing consumption by gender. Only one paper reports on differentiated consumption between men and women in six European Union countries for the period from 2021 to 2023. In Germany, Finland, and Hungary, households managed by women are actually less exposed to inflation. In Poland, the opposite is true, as households managed by women are more exposed to inflation. The situation in Portugal and Ireland is mixed, as these same households are more exposed to inflation, but only when it comes to high-income households. However, the same study shows that households headed by women devote a larger share of their consumption to heating and electricity, which means that they are more exposed to inflation affecting these items, whose prices have risen particularly sharply in recent years following the energy crisis linked to the conflict in Ukraine in 2022. This illustrates the importance of understanding the exposure of different types of households to inflation, particularly in order to optimize the design of public policies.

This area of research is also interesting in light of the literature showing that women tend to perceive inflation more than their male counterparts, without necessarily demonstrating that they are actually more exposed to it.

Inequalities arising from consumption, although often discussed in the media, are still poorly understood. On the one hand, there are numerous examples and studies showing the price gap between goods intended for women and those intended for men. This Pink Tax imposes an additional economic burden on women that is difficult to justify. This imbalance affects many sectors, ranging from personal care products to clothing, as well as services such as hairdressing and dry cleaning.

On the other hand, there is currently too little research and data on shopping baskets and different exposure to inflation. While women seem to be more vulnerable to energy inflation, men seem to be more vulnerable to fuel price increases. Thus, depending on the economic context and the period studied, inequalities related to consumption can have different effects.

Article co-written by Caroline Perrin and Auguste Debroise

[1] (60% x 2.5%) + (25% x 1%) + (15% x 10%)

[2] 10% x (1% – 3.25%) = -0.225%

[3] -10% x (10% – 3.25%)