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ABSTRACT. This paper reviews the evidence and evaluates the claim that the hair-
dressing industry systematically discriminates on the basis of gender and compares
the way in which courts in the UK and US have dealt with such allegations. We
argue that “transaction costs” can be used to provide an alternative (perhaps more
satisfactory) explanation for the pricing patterns observed than does price discrimi-
nation. Any decision to ban gender-based pricing will imply a difficult trade-off
between economic efficiency and concerns for gender equality.
It is commonly thought that women’s hairstyles are more compli-
cated and expensive to maintain than are men’s. Not too long ago,
stylish women wore foot-high “beehives” that defied the laws of
gravity and required frequent visits to a skilled stylist. Women paid
more than men to have their hair “done” but no one worried because
barber-shops and ladies’ salons were unquestionably different in what
they had to offer and who they hired.
In recent years hairdressing habits have changed in a number of
important ways:
1. Men are trying new things with their hair (including hair loss treat-
ments) and spending much more on perms, hair colours, hair
replacement, and “designer” haircuts (Whitlesey, 1996).
2. Women are still investing considerable sums in hair colours
and other chemical treatments but many have opted for simpler
care-free haircuts. According to The Hairdressing Employers
Association, the trend towards a more environmentally friendly, fit,
and active lifestyle has increased the demand for healthy, natural-
looking hair (Handcock, 1996b).
3. Styling equipment is now readily available from local shops making
salon-quality home styling available to all (for example, in 1995,
more than 96% of visits to hairdressers included a cut, compared
to 74% only a decade ago.)
Journal of Consumer Policy
23: 107–126, 2000.
2000 Kluwer Academic Publishers. Printed in the Netherlands.
Catherine Liston-Heyes and
Elena Neokleous
Gender-Based Pricing in the Hairdressing
Industry
There has, undoubtedly, been “convergence” in male and female
hair care. Although this has been reflected in the appearance and
growing popularity of “unisex” salons, there still exist substantial price
differentials between what men and women pay for apparently iden-
tical haircuts, both between and within unisex establishments.
The objectives of this paper are twofold: to determine the scale
and scope of gender-based price differentials in UK hairdressing and
to establish whether these are due to price discrimination or some
other factor specific to the industry. In the next section we overview
the normative economics of price discrimination. Background infor-
mation about the hairdressing sector is also presented. The results
of a survey of consumers and hairdressing establishments in London
are then presented, together with previously published empirical
evidence from the US. Price differentials are computed and their
significance tested. This information is used to assess the claim
that the industry fits the price discrimination model. An alternative
more satisfactory explanation based on transaction costs is presented.
Two legal cases are used to consider legal stances towards gender
pricing in the UK and US. The paper concludes with a number of
policy implications.
PRICE DISCRIMINATION IN THEORY
Each consumer or group of consumers in a market will typically
have differing “willingness-to-pay” for a given good or service. In
markets in which a single price prevails, all except the marginal
buyer would theoretically have been willing to pay a sum greater
than that actually paid. Economists refer to the sum of these extra
amounts as “consumer surplus” (the area under the demand curve
but above the market price) and routinely use it in policy-making as
a measure of consumer (but not producer) welfare.
Loosely speaking, price discrimination involves firms selling dif-
ferent units of the same good at different prices, either to the same
or different consumers, in an attempt to increase profits.1When the
supplier can identify differences in willingness-to-pay between con-
sumers and prevent arbitrage (sale in second-hand markets), he can
charge all consumers what they are prepared to pay. The consumer
surplus which would have been created under a uniform price struc-
ture is now transferred to the producer.
108 Catherine Liston-Heyes and Elena Neokleous
Three conditions are usually required to make price discrimina-
tion feasible and profitable. (a) The suppler must be able to separate
buyers (or groups of buyers) and prevent any exchange or arbitrage
(selling from the lower-price to the higher-price buyer or market)
between them. (b) The two or more markets must exhibit differing
price elasticities of demand, i.e., there must be differences in the
amount consumers are willing to pay for the good or service. (c)
The markets must be characterised by a lack of price competition from
rival firms, in order to prevent price levels from being eroded.
In practice, identifying each individual consumer’s willingness-
to-pay is impossible – this would be first degree price discrimination
– and so price discrimination is invariably of the “second” degree,
in which groups of buyers seek out different packages on a time or
quantity basis, or “third” degree discrimination, whereby the firm
charges different prices to consumer groups emanating different
observable signals (e.g., age, occupation) about their willingness-to-
pay (Pigou, 1920). The pricing of new movie releases in city theatres
versus second runs in suburban theatres, bulk purchases of retail goods,
hard-cover books versus the later paperback editions, the higher prices
charged for last minute airline ticket purchases, and peak time use
of electricity are examples of time-based (second degree) price dis-
crimination. Telephone and electricity price differentials between
households and business establishments, discounts to students and
senior citizens, and children’s menu prices constitute third degree price
discrimination.
Although price discrimination is unlawful if the effects of dis-
crimination substantially lessen competition or create a monopoly
(UK: Competition Act 1980; US: Robinson-Patman Act 1936), a ruling
against it will not necessarily increase social welfare if the objective
is to maximise joint surplus (producer and consumer). Consumers in
low-elasticity markets (high willingness-to-pay) are adversely affected
by price discrimination and prefer a lower uniform price whilst con-
sumers in high-elasticity markets (low willingness-to-pay) prefer
discrimination as do suppliers with market power since this increases
their producer surplus (profits). Varian (1985, 1992) shows that
banning discriminatory pricing leads to positive welfare increases if
output does not change too drastically in response to price changes
(the bulk of consumers are fairly price insensitive) whilst allowing
price discrimination increases welfare if the total output sold in all
markets increases by a sufficient amount once the discriminatory price
Gender-Based Pricing in the Hairdressing Industry 109
structure is implemented. More specifically, the author shows, using
fairly general assumptions (that the relevant demand curves be
downward sloping) that a necessary condition for welfare to increase
when moving form a regime of uniform pricing to one of price dis-
crimination is that the total output sold across all markets increase.
A sufficient but not necessary condition is that the sum of the weighted
output changes in all markets be positive, with the weights being given
by price minus marginal cost of producing the last unit of the good.
Even when this condition is not met, price discrimination can be
welfare enhancing if it opens up a new market in which the willing-
ness-to-pay of the consumers was below the uniform price.
Hence even under this simple definition of welfare the effects of
price discrimination, when it is shown to exist, are ambiguous. Posner
(1976) noticed that the higher profit associated with discrimination
could also increase wasteful competition to obtain monopoly rents. He
argues that if the monopoly rent is completely dissipated, price dis-
crimination is more likely to be harmful to welfare. Widening the
definition of welfare beyond efficiency concerns further complicates
the analysis. For instance, one of the main policy issues in regard to
price discrimination is its effect on income distribution. Price dis-
crimination redistributes income away from the low-elasticity to the
high-elasticity groups and the producers, and since low-elasticity
groups are often (but not always) the richer consumers (Tirole, 1989),
one cannot even a priori make a case against price discrimination
on the basis of income distribution. Moreover, price discrimination
can also be used effectively to correct a host of economic distortions
created by “market externalities” such as when higher parking rates
are charged during office hours to induce people to commute by public
transport thereby reducing congestion during peak times.
Gender price discrimination in haircuts, if there is such as thing,
would be an example of third degree price discrimination where men
and women are charged differently, the differential reflecting each
gender’s price elasticity of demand.
RETAIL HAIRDRESSING IN THE UK
The UK hairdressing sector (excluding the home/mobile sector) com-
prises 29000 salons; 2000 of these are male-only “barber-shops,” the
remainder being either “unisex” or “women’s” hairdressers. Most of
110 Catherine Liston-Heyes and Elena Neokleous
these businesses operate as small single-premises outlets (only a
quarter of all employees in the industry work for firms with more than
one premises).
In 1994–1995, the average UK household spent £100 on hair-
dressing services – £200 for those in the top 10% of household income.
As a nation, the UK spends over £2 billion annually on hairdressing
services alone (not including hair products and cosmetics), almost
double what it pays annually for medical, dental, optical, and nursing
fees over and above basic state coverage (Central Statistical Office,
1995). Despite its economic significance the industry has been the
subject of relatively little systematic study. A search of the academic
literature produced a handful of references to this industry, and not
a single one relating to pricing issues. Industry data are sparse although
the recent crackdown on fraud and tax evasion by the Inland Revenue
in sectors such as hairdressing in which there is substantial self-
employment is likely to help rectify this over the next several years.
The Hairdressing Employers Association (UK) was helpful in pro-
viding aggregate data but access to accounting and other micro-level
data is restricted.
To supplement our findings, we conducted 90 face-to-face inter-
views with members of the general public using a structured
questionnaire. Interviewees were selected at random from customers
at the Brent Cross Shopping Centre located in a high density area
of North London during the last three weekends of December 1996.
We also conducted 150 structured telephone interviews with repre-
sentatives of unisex hairdressing establishments selected at random
from the unisex section of the yellow pages (North London). The tele-
phone interviews allow us to draw comparisons with similar surveys
conducted by the City of New York’s Department of Consumer Affairs
and Office of Oversight and Investigations.
DO WOMEN PAY MORE THAN MEN FOR A BASIC HAIRCUT?
Hairdressers offer a variety of services: cuts, perms, colour treat-
ments, etc. In order to have a common ground on which to compare
men and women rates, we focussed on the basic price of a haircut
(irrespective of time, skills, and/or effort involved), which is what
96 per cent of all clients request on every visit to the hairdresser,
whether male or female (Handcock, 1996a). Our own survey supports
Gender-Based Pricing in the Hairdressing Industry 111
this estimate with 95% of all respondents asking for a haircut on a
typical visit to the hairdresser.2
Our survey suggests that women pay an average of £10 more than
men to have their hair cut (without setting) – a difference which is
statistically significant beyond the 1% significance level (unequal vari-
ances t-statistic 6.36). The average price paid for a basic haircut was
£15.41; men paid an average of £9.23 whilst women paid an average
of £19.17; see Table I.3
When we consider the type of establishments frequented by the con-
sumers, we find that most (i.e., 63%) prefer to frequent unisex salons;
see Table II. The average price paid in unisex salons (£18.68) is
slightly higher than that typically found in ladies’ or men’s only hair-
dressers. Unisex salons tend to be trendier and more upmarket so
this is not surprising per se. It is furthermore interesting to note that
the average premium charged by unisex salons is £5.26 for women
and £5.71 for men, a difference which is not statistically significant
in absolute terms but in percentage terms the premium paid by men
is much higher (87% above barber-shop prices) than that paid by
women (33% above ladies’ salon prices). In other words, the absolute
difference between male and female haircut prices is maintained within
unisex establishments and the additional costs associated with more
fashionable surroundings and trendier, better qualified staff appear
to have been allocated without reference to gender.4
What is particularly interesting, however, is that establishments that
provide a “unisex” service charge two prices: An average of £12.25
is paid by men compared to an average of £21.39 paid by women; a
difference of £9.14 (unequal variances t-statistic 4.37). It is these
pricing differences which are the most relevant to the discussion of
112 Catherine Liston-Heyes and Elena Neokleous
TABLE I
Price Paid for a Basic Haircut: Men and Women
All Mean price Median Maximum Mean tip
hairdressers price
Men 0£9.23 0£7.00 £30.00 £1.62
n = 34 S.E. = 0.92 S.E. = 0.22
Women £19.17 £15.10 £50.00 £2.10
n = 56 S.E. = 1.26 S.E. = 0.18
All £15.41 £14.25 £50.00 £1.91
n = 90 S.E. = 0.99 S.E. = 0.14
Gender-Based Pricing in the Hairdressing Industry 113
TABLE II
Haircut Prices by Type of Establishment
Unisex Ladies’ salons’ Men’s salons (Barbers)
Men Women All Men Women All Men Women* All
Mean £12.25 £21.39 £18.68 – £16.13 £16.13 £6.54 £5.25 £6.41
price (1.58) (1.38) (1.21) (3.23) (3.23) (0.57) (0.75) (0.53)
(S.E.)
n 16 38 54 0 12 12 18 2 20
Maximum £30.00 £40.00 £40.00 0 £50.00 £50.00 £15.00 £6.00 £15.00
* Two female respondents stated that they frequented a local barber that was happy to cut their hair at a men’s rate.
gender price discrimination and so we restrict our attention to unisex
establishments.
So far we have been concerned with the self-reported prices paid
by consumers. This tells us something about the amounts individ-
uals are prepared to part with to get their hair cut but doesn’t tell us
anything about the range of prices available to them. To get an insight
into the minimum posted prices at unisex salons we selected a random
sample of 150 from the area’s Yellow Pages. Each was asked, over
the phone, how much they charged for a basic man’s cut. Once the
price was quoted, they were asked how much they would charge for
the man’s female partner who happened to have a very similar hair-
style. The procedure used here is consistent with that used in the
New York survey but as a referee pointed out, it may have “forced”
respondents to give prices that are somewhat out of line with what
the couple would have paid if they had not specified the similarity
of the cut and/or were given the opportunity to observe the head of
the female customer. In fact, many replied that they would need to
see the woman before they could make such a quote to which we
replied firmly that we would not make an appointment unless we
had a firm offer. The lower bound was entered in the database
whenever a price range was given and this may have decreased the
sample price differential. Nevertheless, there was a distinct differ-
ence between the prices quoted for a man’s and a woman’s haircut
in the 150 unisex establishments: £11.58 (S.E. = 0.34) and £16.42
(S.E. = 0.55), respectively (unequal variances t-statistic 15.24). Thus,
the mean difference amounted to £4.95, corresponding to a 43%
mark-up.
These results are broadly consistent with those obtained by New
York City’s Department of Consumer Affairs (NYDCA) from a similar
telephone survey of 80 hair-cutting establishments in five New York
boroughs conducted in 1992 (Gypped by gender, 1992) and those
put forth in a 1996 follow-up survey of 199 haircutters commis-
sioned by the New York City Council Office of Oversight and
Investigation (NYCOOI) (The price is not right, 1996). The NYDCA
study reports an average disparity between women’s and men’s prices
of 25 per cent whilst the NYCOOI found a 20 per cent mark-up
overall. They too used the lower price bound whenever a price range
was quoted and this bias is acknowledged in the NYDCA report. We
cannot explain why the mark-up in the North London survey is higher
(43%) than the figures found in the two New York studies.
114 Catherine Liston-Heyes and Elena Neokleous
The California Assembly’s Office of Research also conducted a
survey in which it found that 40% of hair salons were charging women
from $2.50 to $25.00 more for services similar to those provided to
men (Whitlesey, 1996). Another survey of 100 US establishments con-
ducted in 1993 by Money – a popular business publication – reports
that women routinely pay 20% to 40% more than men do at the same
establishments even when they have similar haircuts (Garrett, 1993).
Little information is given on the sampling procedure and the nature
of the interviews and direct comparisons with our own results are
difficult to conduct.
Many cases of alleged price discrimination are often explained by
unrecognized costs. Lott and Roberts (1991), for instance, present
plausible cost-based explanations for the price spreads of retail
gasoline products, the “high” price of dinners at restaurants, the “high”
price of popcorn at movie theatres, and the fact that airline ticket prices
vary with how long before the flight’s departure the ticket is purchased.
All four of their explanations are based on either fixed costs, time
costs, or inventory costs, factors the authors suggest can create the
appearance of pricing anomalies.
To find out whether these factors were also responsible for the
gender price difference of haircuts, we asked the unisex establishments
which quoted different rates to explain the reasons why they chose
to do so. The most frequent answer was that “women take longer,”
an excuse which does not make much sense given that we specified
that the two partners had identical hairstyles. The next most popular
contenders were that “women are more fussy,” “women are more
difficult,” and “women expect more.” Quite a few acknowledged that
this pricing policy was not very fair and suggested the possibility of
a discount if we both made an appointment. A number of times, our
query was met with a polite suggestion to call later when a more senior
employee was present. The two New York studies report similar
arguments, including the argument that “women talk more than men”
(Green & Seitz, 1996; Letts, 1996).
What can we learn from all this? At best, the explanations suggest
that, on average, a woman’s haircut requires more time, effort, and/or
skills to complete. Indeed, informal discussions with five UK hair-
dressing salon managers suggest that a woman’s cut is often more
expensive than a man’s but the managers concede that this is cer-
tainly not true in all cases. Moreover, the New York study did not
find evidence that the hairstyles preferred by women today took more
Gender-Based Pricing in the Hairdressing Industry 115
time to cut than the men. Since the hair-cutting technology and fashion
are quite similar between the two cities, there are no reasons to believe
that this would be different in the London trade. It is also difficult
to justify the claim that a woman’s haircut necessarily requires more
skills than a man’s haircut. In the UK, the hairdressing trade usually
demands a standard three-year apprenticeship, or two years of college
training, or Youth Training Scheme combined with a year of post-
college experience on the job. Surprisingly, we found that the training
require to work in a men’s salon (i.e., barber-shop) takes just as long
as the training required to work in a unisex or women’s salon. The
NVQ & SVQ basic entry qualification as a junior hairdresser – men’s
or ladies’ stylist – requires a set of 16 common units; the manda-
tory training differs by a single unit (H.T.B., 1996). This view is
supported by the observation that there are no significant differences
in the wages paid to male and female hairdressers. If we accept the
notion that wages are a fair reflection of marginal productivity, the
skills mark-up theory is difficult to defend.
As for the other cost components listed in Lott and Roberts (1991),
we could not identify fixed costs or overhead cost that were neces-
sary elements of a woman’s haircut but not of a man’s. Chairs, combs,
brushes, mirrors, scissors, and razors are not gender-based tools and
are used in both types of haircuts. Unisex and ladies’ salons are usually
equipped with additional gear but it is only used in conjunction with
other services such as perms and hair colouring.
We also found a significant discrepancy between the customer
turnover rates – the number of customers served in a given time period
– of male and female establishments. According to our sample, only
about half the men go to unisex salons, the other half prefers barber-
shops. It we assume that the different types of establishments (barber,
unisex, ladies’ salons) operate at similar rates of customer turnover
and have the same capacity (e.g., chairs and employees), then we
would expect at least 25% of all hairdressing establishments to be
barber-shops given that roughly half the population is male. When
we take into account that men typically visit their hairdressers more
often than women (almost twice as often according to our customers
questionnaire), this figures climbs to 33%. In other words, if barber,
unisex, and ladies’ salons operated on comparable rates of customer
turnover, we would expect the distribution of establishments to be
33% barber-shops, 58% unisex salons, and 9% ladies-only salons.5
Yet less than 7% of all salons are barber-shops. (This 26% gap is a
116 Catherine Liston-Heyes and Elena Neokleous
conservative estimate since barber-salons will typically have less seats
and employees per shop than unisex and ladies’ salons.) These basic
calculations suggest that male-only establishments experience much
higher rates of customer turnover.
Our survey showed that only 30% of men made an appointment
to have their hair cut compared to almost 80% (78.7%) of all women
interviewed. Moreover, most of the booking requirements for men
were with unisex salon. The no-bookings first-come first-served
system found in many barber-shops is feasible when each customer
can be served within 15 to 20 minutes, the average time required for
a haircut. Unisex and ladies’ salons provide a number of services many
of which require the customer to remain in the shop for much longer
periods of time and use equipment that is not required for the typical
female haircut. A booking system is needed because customers will
otherwise have to wait much longer if the available chairs are occupied
by someone having, for example, a colour treatment or a perm. It is
plausible that the price of a haircut would fall if a salon was to offer
haircuts only since the turnover would be much higher and the per
capita share of overheads (including a receptionist to book appoint-
ments) and fixed costs (the non-haircut related equipment) would
decrease. If this is true, then the overcharge to women with simple
haircuts may in fact be used to subsidise customers (mostly women)
who consume the more time- and/or capital-intensive services.
Nonetheless, even if on average, women are more costly to process
than men, it remains true that different price are quoted to men and
women with identical hairstyles. Does this necessarily constitute
gender price discrimination? If not, what other explanation can be
given for the observed price differentials?
GENDER PRICE DISCRIMINATION?
Hairdressing would indeed appear to be prone to third degree price
discrimination given that suppliers can easily distinguish between male
and female patrons, and there are obviously no possibilities of arbi-
trage (condition a). It is an empirical matter whether or not male
and female consumers have different price elasticities of demand for
haircuts but anecdotal evidence suggests that, on average, women tend
to be more concerned with their physical appearance than men and
this implies a higher willingness-to-pay for a haircut (condition b).
Gender-Based Pricing in the Hairdressing Industry 117
It is the third condition – that markets be characterised by a lack
of price competition from rival firms – that is difficult to satisfy
given what we know about the competitive structure of retail hair-
dressing. Given the relatively low set-up costs and the lack of entry
barriers (see, e.g., Dubashi, 1994), it is indeed surprising that we
haven’t seen major entry into the industry of a new brand of “unisex
barbers” – i.e., haircutters specialising in trims and no fuss cuts –
an observation that may (wrongly) lead to the conclusion that price
differentials are symptomatic of price discrimination. Two other phe-
nomena, a thriving home/mobile sector and the presence of substantial
transaction costs, may help explain the apparent lack of competitors
“cream-skimming” the price differentials thereby weakening the price
discrimination hypothesis.
An important characteristic of the hairdressing industry which was
not highlighted in our survey, nor in the New York studies, is the
relatively popular use of home/mobile hairdressers by female con-
sumers. Since many of these enterprises operate on the fringes of
the informal sector, reliable information about these operations is
inevitably difficult to gather (Rock, 1988; Van Ours, 1991). In our
survey, only three respondents (all females) stated that they use
a home/mobile hairdresser. This is likely to be a substantial under-
representation of the true proportion of women using these services.
Indeed, according to some estimates, as many as 37% of all UK hair-
dressing “visits” could be with home/mobile hairdressers (Handcock,
1996c).6
There are four potential reasons for this under-representation: (a)
the location and sampling procedure used in the survey may have been
prone to this type of bias; (b) many customers are reluctant to admit
that they take part in black market activities and will deliberately
falsify their responses; (c) many women alternate between visits to
an established hairdresser and use of an unregistered mobile unit and
may only report the former; and (d) London incomes are higher than
elsewhere in the country – GDP per employee in London is 36% above
the national average (London and the rest, 1998) – and this may
adversely affect the propensity of customers to enter the black market.
More specifically, there are strong differences in customer behav-
iour between the UK regions as reflected by the fact that over 34%
of all registered hairdressing employees are in the South East (London
region) of England whilst only 7% are in East Anglia and the West
of England, the remainder spread across the North, the West Midlands,
118 Catherine Liston-Heyes and Elena Neokleous
and Northern Ireland (Rock, 1988). For these reasons, it is inadvis-
able to use our survey results to infer the true proportion of
home/mobile users in the London area.
In general, home/mobile hairdressers charge considerably less for
women’s haircuts. The UK average price for a wash, cut, and blow
dry for a woman’s haircut in a ladies’ or unisex salon is £12.51
compared with £7.42 with a home/mobile hairdresser – a 41% rebate
if we use the UK average for a woman’s haircut. It is revealing to
find that by far the highest savings offered by these non-salon options
are on the basic cut. The home/mobile prices of a perm are 22%
lower than the going average rate whereas permanent colour treatment
are only 10% cheaper than the salon options. Many of the “mobile”
businesses are not equipped with the tools to provide these services.
It is plausible to suppose that the third of UK women who use
the home/mobile alternative regularly are the ones with the higher
demand elasticity – those who would frequent the discount unisex hair-
cutters. Indeed, a recent survey of these customers suggests that “low
prices” is the major attraction associated with this alternative, followed
by flexibility of hours, parking, and child care convenience (Handcock,
1996c).
Hence a subset of women do have access to lower prices if they
are prepared to enter the home/mobile hairdressing market and –
although the figures are uncertain – a large proportion of UK women
do. If this segment is included in the definition of the hairdressing
industry, then it is effectively more competitive and the true price
discrepancy between men’s and women’s haircut prices will be
smaller.7
Although cheaper alternatives are available to some women, the
fact remains that within licensed unisex establishments some women
pay more than men for exactly the same services. To reconcile this
with our claim that the industry is competitive (i.e., that condition c
is not satisfied), we argue that the industry suffers from statistical
discrimination. Since, on average, women’s haircuts cost more than
men’s haircuts in terms of time and skills, gender-based pricing may
simply have prevailed because it is an efficient way to avoid the overall
transaction costs associated with gender-free billing and not because
it permits hairdressing establishments to increase their profit margins.8
This leads us to believe that suppliers use gender as a “signal” of
the likely costs associated with the time and skills required by the
customer. Over recent years, this signal may have become more
Gender-Based Pricing in the Hairdressing Industry 119
“garbled” due to changes in the styles preferred by each gender –
i.e., the variance of the costs associated with haircuts has increased
thus reducing the efficiency of gender as a signal to high vs. low
cost cuts – but continues to be used, for historical and practical
reasons, by the bulk of the industry. In this case, overcharged women
with simple hairstyles are subsidising men and women with time/skill
consuming haircuts and/or those (mostly women) who are consuming
perms, colours, and other services not offered by the traditional barber-
shops.
Substantial gender price differentials in otherwise competitive
sectors (with low profit margins) have also been observed by others.
Ayres and Siegelman (1995), for instance, present ancillary evidence
that new car dealerships treat women and blacks differently from white
male consumers and suggest that this disparate treatment may be
caused by dealers’ statistical inferences about consumers’ reserva-
tion prices. Whilst the new car market differs from the hairdressing
sector in that the former typically involves negotiations between buyer
and seller, the two markets are characterised as “competitive.” The
authors state that their result “. . . stands squarely in the face of
earlier analyses that reject the possibility that discrimination can persist
in a competitive market” (p. 319).
Under this scenario, transaction costs as opposed to monopoly
profits are at the heart of the price differentials, and a legislative
move away from gender-based pricing can hardly be justified in
terms of economic efficiency unless the definition of consumer welfare
is widened to include the psychic benefits associated with equal market
treatment of the genders. If indeed fashions have changed to such
an extent that the signal “male” or “female” is no longer economically
efficient in separating high from low cost cuts, then competitive forces
should induce a new gender-free pricing framework.
A number of successful chains (mainly US) have started to offer
15–20 minutes haircuts at a fixed price regardless of gender. Many
industry experts had predicted the advent of such gender-free discount
hairdressers. According to their analyses, only the top 25% of the hair-
cutting market are interested in the expensive fashion cut and hair
franchisors in particular will pursue the estimated 75% of the market
that are interested in low-price cuts (McGrath, 1984). Crossover rates
between the two markets are estimated to be as low as 8% (Poe, 1988).
It may take some time before the bulk of the industry finds it prof-
itable to change its pricing practices; yet, mounting pressures from
120 Catherine Liston-Heyes and Elena Neokleous
human rights activists for gender-free billing is accelerating the process
by successfully introducing legislation to this effect. It is therefore
interesting to examine how the legal systems of the UK and the US
have dealt with complaints of gender-based billing and in particular,
how they have balanced concerns for economic efficiency and those
for equality.
SAME OFFICIAL POSITION, DIFFERENT LEGAL INTERPRETATIONS
The UK Office of Fair Trading referred us to the Equal Opportunities
Commission (EOC) when queried on this matter. The EOC deals
with complaints about sex discrimination in the provision of housing,
goods, facilities, or services that may be brought before the County
Courts in England and Wales or the Sheriff Courts in Scotland. Most
of their legal stance is determined by the Sex Discrimination Act of
1975 (SDA) and it is Section 5 s. 29(1)–(3) which is most relevant
to issues of gender price d discrimination. It states:
The Act makes it unlawful for anyone who is concerned with the provision of goods,
facilities or services to the public or a section of the public to discriminate by refusing
or deliberately omitting to provide them, or as regards their quality or the manner in
which or the terms on which he provides them. Discrimination of this kind is unlawful
irrespective of whether the goods, facilities or services are provided for payment or
free of charge. The following are examples of the facilities and services to which
this provision applies: (. . .) (g) the services of any profession or trade, or any local
or public authority.
But further, in s. 29(3), it states:
A person who provides goods, facilities or services which are designed for one sex
(e.g., women’s clothes) is not required to provide the corresponding goods, services
or facilities designed for the other sex. This applies also in relation to skills which
are normally in a different way for men and women (e.g., hairdressing).
This last paragraph makes it legal for barber-shops to charge dif-
ferent prices but it does not allow them to deny access to women
who want a man’s cut, not does it allow unisex salons to charge dif-
ferent prices for identical cuts.
The only relevant record the EOC could provide us with was the
case of Waldock v Whitney & Prosser, initiated by Mrs. N. Waldock
on 25 January, 1984 in the Hereford County Court. Mrs. Waldock com-
plained that although she had short hair and her haircut took less
than half an hour of the assistant’s time, she had to pay £7.50 whilst
Gender-Based Pricing in the Hairdressing Industry 121
her husband, served afterwards by the same assistant for a haircut
that took the same amount of time, was charged only £4.00. Mrs.
Waldock claimed that she had been discriminated against on the
ground of her gender contrary to the SDA Section described above.
The Hereford County Court dismissed the claim on the basis that it
was not “commercially viable” for the defendants to charge on a
time basis and that they were entitled to fix a fee which took into
account the fact that cutting and styling a woman’s hair was gener-
ally more time-consuming and called for more care and thought than
cutting and styling a man’s hair. The court found that cutting and
styling a woman’s hair was generally more time-consuming and called
for more care and thought than cutting and styling a man’s hair. The
court found that cutting and styling a woman’s hair was not the same
job as doing the same for a man – even if the higher application and
skill were not provided on every occasion, it still had to be avail-
able. On this basis, the court decided that the service being provided
was basically different from that provided for a man and that the
difference in price was thus justified.
The court acknowledged, then, that the £3.50 surcharge imposed
on Mrs. Waldock had very little to do with the actual services received.
The cost of the haircut was based on a gender average (i.e., £7.50) and
women who require more time are cross-subsidised by those who take
less than the average. By invoking the transaction costs associated with
an alternative pricing scheme (i.e., one based on time), the court
indicated that economic efficiency – producer surplus in particular –
was an issue. This is quite different from the stance taken by the
New York City Council.
The New York City Administrative Code – the city’s Human Rights
Law – prohibits gender discrimination in the provision of goods and
services and the text of the relevant sections reads much like the one
above. Shortly after the publication of its 1992 study (see above),
the New York Department of Consumer Affairs in conjunction with
the New York City Human Rights Commission has won a few dozen
lawsuits against service establishments who practised gender-bias
pricing. But in the absence of specific regulations, the detailed
evidence required by courts was costly to collect and the suits
were not an effective deterrent for the bulk of the industry. After the
release of the 1996 study by the NYOOI (see above), however, the
City Council amended the New York City Administrative Code by
introducing the Gender-Based Pricing Bill.9Under the proposed law,
122 Catherine Liston-Heyes and Elena Neokleous
posted prices based on gender would be prima facie evidence of gender
bias and subject to civil penalties with inspectors encouraged to write
up the violations on the spot. The supporting documents do not
mention – even in passing – the costs associated with gender-free
pricing schemes and the deliberations have very few references to
economic efficiency.
Courts in both countries acknowledged the transaction cost
argument but only the UK gave it precedence over gender discrimi-
nation. It is a matter of speculation whether the same verdict would
be reached by the UK court if the same case was represented more
than a decade and a half later. In the US, the trend towards gender-
free billing is certainly growing. California became the first state to
explicitly ban gender-based pricing for services such as hair salons
and dry cleaners and many more are expected to follow. Human
rights laws that ban gender-pricing have recently been introduced in
New York City, Washington DC, and Massachusetts. Gender-pricing
measures were introduced (but failed to pass) in Florida, Rhode Island,
and West Virginia and law makers in these and other states have said
that they will continue to press this issue (Whitlesey, 1996).
CONCLUSION
In this paper, we assess the claim that the hairdressing industry sys-
tematically price discriminates on the basis of gender. We provide
empirical evidence (for UK and US) that some women pay more
than men for a haircut with no apparent cost differences. We nonethe-
less argue that the sector is competitive – particularly once the
home/mobile part is taken into account – and that the price differen-
tials are unlikely to emanate from price discrimination as typically
practised by firms with monopoly power.
An alternative explanation is that the price differentials reflect
expected differences in the average costs of men’s and women’s
haircuts. In other words, the industry is prone to statistical discrim-
ination between the genders and this might explain why some women
– those with low cost hairstyles – subsidise men and other women with
time/skill consuming haircuts and/or those (mostly women) who are
consuming perms, colours, and other services not offered by the
traditional barber-shops. Although changes in fashion have affected
the ability to correctly separate high from low cost patrons, the reason
Gender-Based Pricing in the Hairdressing Industry 123
why gender-based pricing has survived in this competitive industry
has a lot to do with the fact that it is an efficient way to avoid the
overall transaction costs associated with gender-free billing – and
not because it permits hairdressing establishments to increase their
profit margins. If the industry is competitive – the stylised facts are
certainly consistent with this claim – then chances are that gender-
based pricing has been and, for many, continues to be economically
efficient relative to its alternatives.
Although the recent appearance (mainly in the US) of low cost
no-frills salons offering gender-free fixed prices suggests that alter-
native pricing systems are becoming more profitable, the demise of
gender-based pricing based on preoccupations with economic effi-
ciency would probably be much slower were it not helped by societies’
concerns with gender equality. Indeed, the two court cases examined
in this paper highlight the fact that a decision to ban gender-based
pricing results from the trade-off between economic efficiency (based
on evidence that this method of pricing decreases the transaction costs
associated with haircuts) and concerns for gender equality. The US
is increasingly voting in favour of the latter and has already banned
gender-based billing in many locations.
NOTES
1Varian (1989) presents an excellent exposition of price discrimination. See also
Tirole (1989) and Varian (1992).
2For purposes of comparison, we subsequently omit from our price analyses respon-
dents who chose “cut-and-set” on the basis that this is a different product than the basic
cut. This brings down our own estimate to 92%. Although a basic cut may involve
different units of time, skills, and/or efforts, price lists in hairdressing establishments
are fixed with respect to these factors and most respondents would be unable to
assess or remember these characteristics.
3As a referee correctly pointed out, any monopoly story looking at the extraction
of consumer surplus would have to account for the budget over a longer period of
time than a single haircut. Whilst estimating consumer surplus values is beyond the
scope of this article, we did look at annual expenditures on hairdressing services and
found that on average men get their hair cut more often than women such that on an
annual basis men and women pay approximately the same average amount in hair-
dressing fees. This is no longer true if we compare annual fees paid by men and women
with short hair (94% and 16%, respectively, of men and women in our sample). In
fact we found that a woman with short hair pays an average of £258.31 per year at
the hairdressers, a significantly higher expenditure than the £115.58 paid by her male
counterpart.
4We are grateful to an anonymous referee for pointing this out.
5We suppose that establishments are of equal size (in terms of chairs and employees)
124 Catherine Liston-Heyes and Elena Neokleous
and share the same operating hours. We also assume that men visit their hairdressers
about twice as often as women. Under this scenario, men have 66% of all the haircuts
sold in a typical year whereas women only purchase the remaining 33%. Since about
half of the men frequent unisex salons compared with 76% of the ladies, we can
infer that 0.50
×66% + 0.76 ×33% = 58% of salons should be unisex, 33% barbers,
and the remaining 9% ladies-only salons. These are rough approximations computed
on the basis of the habits of the respondents in our London sample and may not be
a just representation of the UK market. Nonetheless they do provide some idea of what
the distribution of establishments would look like under equal customer turnover
rates.
6This figure is relatively high compared to the only two other sources we could
find on this issue. Van Ours (1991) in an econometric study of formal and informal
market services based on a 1985 survey of 2126 Dutch households found that 27%
of all households were either entirely reliant on home/mobile services or used them
in combination with visits to an established hairdresser. Rock (1988) reports a figure
of 25% for the UK market.
7We reported in an earlier section that the average price for men was £9.22 whilst
that for women was £19.17 – a difference of £9.95. Let us suppose that our survey
grossly underestimates the use of the home/mobile sector and that like elsewhere in
the country, it encompasses 37% of all hairdressing visits in the North London area.
There are two ways to calculate the adjusted estimates: We can either assume that 37%
of women pay only £7.42 for their haircut which yields an overall average price for
women of £14.82, or we can assume that 37% of women pay 41% less than the average
North London price found in the survey in which case the adjusted average is £16.26.
Hence once the home/mobile sector is accounted for, the price discrepancy varies
between £5.60 and £7.04 depending on the way the average price is adjusted.
8Industry pretax profit averages approximately 8% (Finegan, 1991). Given its high
rates of bankruptcy and proneness to market of downturns, this figure does not suggest
excessive returns although little information is available on the relative performance
of different outlets.
9New York City Committee on Consumer Affairs, A Local Law to amend the
Administrative Code of the City of New York, in relation to the prohibition of dis-
criminatory pricing. Report of the Legal and Governmental Affairs Division (Int.
No. 804), September 27, 1996.
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THE AUTHORS
Catherine Liston-Heyes is a Senior Lecturer and Elena Neokleous is a research
assistant at the School of Management, Royal Holloway College, University of London,
Egham, Surrey, TW20 0EX, UK. E-mail (Liston-Heyes): c.liston-heyes@rhbnc.ac.uk;
(Neokleous): elena.neokleous@rhbnc-ac.uk; fax: +44 1784 439 854.
The authors are grateful to two anonymous referees and to Anthony Heyes for
comments on an earlier draft.
126 Catherine Liston-Heyes and Elena Neokleous
