Unfair Pricing?
A Liberal MPP, Lorenzo Berardinetti, is introducing a private members' bill into Ontario legilature to try and stop the 'unfair' pricing of charging a different price to men and women. It is true that for many things, such as for hair cuts, women do pay more than men. Why is this automatically thought of as unfair though? Sure, it sounds bad to say that you charge more to one group than another, but to call any price unfair in a free market is just stupid. I am not going to get into whether cutting a woman's hair has more costs than cutting a man's hair (even though it likely takes more time to cut a woman's hair), because it is equally stupid to suggest that companies should have a certain profit margin and anything higher is gouging the customers. Companies price discriminate because it is more profitable do to so, not to try and take advantage of a certain group. When you go to a movie theatre, notice that they may offer discounts to senior citizens or children. This is not because an old person watches the movie 40% less or that the theatre wants to be nice to these disadvantaged groups, but because seniors may not be as willing to go to movies without a lower price so the theatre lowers their admission price to try and maximize their revenue. I do not feel like I'm in any way taken advantage of by movie theatres by them making me pay the full adult fare because they don't actually make me pay that fare, I only have to pay it if I want to go to a movie. I happen to think the adult fare for movies are too high, even after the recent reduction to $10, so I choose not to go to movies and thus not have to be subject to their pricing. If there are enough people that share the same view as me and act upon it (saying the prices are too high while you are sitting in the theatre does not count) the prices will come down. The companies that provide hair cutting services charge these prices because it will yield the most profit, not because they want to treat men better. Women probably are willing to pay more because they value hair cuts more than men, for instance a friend of mine got her hair cut a couple weeks ago and is still talking about it because her hairstyle is slightly different. She paid close to $100 and was in the place for at least a couple hours getting a bunch of various things done. For me a hair cut is an inconvenience that has to be done, like shaving or referring to McGuinty as 'premiere'. So from this statistically significant sample of two people in Ontario, it is easy to see why women may pay more for a service that is the same in name only. Let's just say women pay $40 and men pay $20. Under the new legislation businesses cannot charge different prices to males or females. So any barber shop that has a $20/customer price and has 95% men clients won't be effected, and neither would the hair salon that charges $40/customer and has mainly women customers. The places that would be hurt most are uni-sex stores that try to serve the needs of both men and women. Depending on enforcement if this becomes law, it may not be profitable at all to have different prices for men and women if penalties are stiff enough to not have any store go against the law. If the store moves all prices down to $20, it would have no impact on the male market, but female customer base will increase. The store can now start to move prices up because the female market is putting the demand at above the store's capacity. So if the price gets moved to $30, half way between male and female market price, no males will go anymore since they can get hair cuts $10 cheaper, and they will be filled to capacity with female customers. But why would the company be satisfied with being filled to capacity at $30 when they can do it at $35, $37, or maybe even at $40? They would just become a female only store. Or they could leave their prices at $20, and any female that comes in wanting a hair cut may not be satisfied because they will not spend as much time on their hair cut as the $40 places.
Either way, the prices will go up to $40 or down to $20 for everyone, effectively eliminating all the uni-sex hair salons. But really, screw economics, it obviously doesn't have a place when we are talking about the public good, right? I assume this legislation will also target auto insurance? Males pay more than females, especially at a younger age. Nevermind that these egg-head actuaries can calculate that males are more expensive to insure than females, males and females need equal insurance rates for our unequal driving habits! (Wait, I shouldn't suggest that males and females are different. The president of Harvard can't even suggest that, at an institution that is supposed to encourage thought!) But really, the actuaries calculate that men are more expensive using really complicated math-type equations and formulas thingies, I mean we all hate math, right?
posted by William Joseph @ 1:42 PM
0 comments
