An Evaluation of New York's Pink Tax Ban: Prices, Assortments, and Consumer Switching

Abstract

This paper studies New York State’s 2020 pink tax ban, a regulation that bars retailers and manufacturers from gender-based pricing. In particular, businesses are prohibited from charging different prices for substantially similar men’s and women’s products and services. The pink tax ban was motivated by concerns that women face higher prices than men, but it is not clear whether the ban can deliver on its stated goals of reducing the prices of women’s products and eliminating gender asymmetries. First, the regulation applies only to substantially similar products that share the same brand, while many products sold to men and women differ in their leading ingredients, even within the same category and brand. Second, retailers can comply with the regulation by raising the price of men’s products or adjusting their product assortments to avoid offering substantially similar men’s and women’s products. These strategies would harm consumer welfare. Using data from personal care products, we study how the regulation affects the average prices of men’s and women’s products, price differences of products with similar ingredients, and product assortments. We use a difference-in-differences methodology where neighboring states serve as controls. We also explore whether the regulation affected consumer purchasing behavior, either directly through changes to product prices or assortments, or indirectly by nudging consumers to consider products targeted to the opposite gender. Our analysis sheds light on the efficacy of pink tax bans, which are currently under consideration in other states.