CO135 Chris Bostic on the End of Smoking

Chris Bostic is Deputy Director for Policy of ASH, Action on Smoking and Health. Which, since 1967 has been campaigning against Big Tobacco to reduce the death toll from smoking.

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So this is a famous clip of Ellen Degeneres on her TV show talking about some ridiculous products aimed at women.

Ellen is a pretty funny character, but she really doesn’t need to do much work to get a laugh at the idea of pens specially for women.

But this clip refers to one trope that was going around a while back, called the Pink Tax.

The idea was that products aimed at women were having their prices jacked up by the evil patriarchy so that women had to pay more for the same things than men. The whole idea was really just a clickbait thing, and it was confused as to whether it referred to products that were marketed at women’s preferences, or products that women needed to be different to men’s products because of their physiology.

Ellen’s example is a pretty clear case of a product that you can literally pay any price you like for. You can go to a discount store and buy packs of dozens of pens for a dollar or so, or you can spend hundreds of dollars for a single premium pen. I found one pen for sale online that costs more than $5,000 – but hey, it’s got free shipping. And all those pens do pretty much the same job; what you write won’t be any better because you wrote it with a pen that costs thousands of times more than the cheapest pen out there.

But why does this extreme price difference exist? Surely the laws of the market should flatten out the prices. Well, clearly they don’t. Because here’s a secret of capitalism. If you’re selling pork bellies or  currency futures, supply and demand set the prices, it’s a true marketplace. But if you’re buying a pen because you want to sign a card that you’re sending to someone – do you really shop around? Of course not.

What sets the price is what the market will bear. What people will pay without complaining too much. If the pen costs a dollar, will you go to the next store to see if they’re selling it cheaper? No. and even if you know that the next store sells it for only 50 cents, will you go there if you’re already in the place that sells it for a dollar? Very unlikely.

And the manufacturers and retailers know this. They even do market testing to see what price they can get away with charging, and build their whole product around that information. That’s why women’s shampoo costs more than men’s, because women are willing to pay more for it. That’s also why men’s cars and home stereo systems cost more than women’s – because men are willing to pay more for them.

And before you ask, yes there are such things, marketers don’t write that on the label, but those markets are strongly gendered.

That brings me to a campaign that did have a bit more sense to it, but was still misguided. Value Added Tax, called VAT is a sales tax in all EU countries, and it’s pretty high, in some countries up to 25 per cent, but typically around 20 per cent. And in most EU countries, that sales tax was charged on tampons and other women’s hygiene products.

There are active campaigns to have it removed from these products because they are regarded, reasonably enough, as necessities. From the start of this year, 2020, that campaign was successful in Germany. The tax there was 19 per cent, and it’s just been cut to just seven per cent. So a win for women, right?

Not quite. As soon as the VAT was cut on these products, the manufacturers, it is reported, moved to increase the prices to compensate, and bring the retail price back to what it was before the tax cut.

So instead of this being a tax cut for women, it was a tax cut for the producers. Because the price of consumer products isn’t really set by the cost of production, it’s set by what the consumers are willing to pay. This isn’t even a secret, IKEA the massive Swedish furniture say that the first thing they design on their products is the price tag, and everything else follows from that.

The point is that, particularly when it comes to market forces, it’s hard – it’s nearly impossible – to do anything that doesn’t have unintended consequences.

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