When Consumers Pay More Due to Race or Gender

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Is there a “woman tax”? By some account, women pay over $1,300 more annually than men for everything from deodorant to sneakers to health care. They’re not the only group that pays a premium, though. Men are charged thousands more than women in auto insurance over their lifetimes, and there are indications that African-Americans and Hispanics pay more for homes than other ethnic groups. Doesn’t all of this seem sorta illegal?

Well, if discrimination could be proven—and if it was proven that there was no legit explanation for higher prices—then sure, lawsuits would be flying, probably with success.

As things stand, we’re left with situations that seem unfair and discriminatory, but it’s hard to do much about them. Here are three situations in which consumers tend to pay more based on their gender or race:

Women pay more for lots of stuff—health insurance especially.
Lately, a post created by LearnVest, a personal finance site for women, has been circulating at Forbes and Huffington Post. The headline indicates that there is a “woman tax,” in which “gendered pricing” results in women paying over $1,300 per year more than men for things like dry cleaning, health care premiums, and imported goods, which are sometimes taxed at higher rates if they’re sold to women.

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The big dollar estimate comes from a California study conducted in the ’90s showing women spent $1,351 extra, on average, than men for comparable goods, fees, and services. While the figure is questionable because it’s based on data that’s at least a decade and a half out of date, in theory the gender pricing gap still exists, and perhaps has even grown. In many cases, women pay significantly more than men for health care: According to a study released earlier this year, the vast majority of states allow insurance companies to charge women higher premiums than men, and in those states, 92% of health plans do just that. The study, from the National Women’s Law Center, reports that, all other factors being equal, it is common for a female non-smoker to be charged more than a man who smokes. There are extreme cases as well, as in South Dakota, where one plan charges a 40-year-old woman $1,253 more each year than a 40-year-old man for essentially the same coverage.

The main explanation given for the health insurance gender discrepancy is a simple one: Women tend to use health care services a lot more than men. For a variety of reasons, women are more likely to go the doctor—or even have a doctor—than men, and insurance companies say they should pay for the privilege. Is this justification enough to charge exorbitantly higher premiums to women? It is from the insurance company’s perspective. Speaking of which …

Men pay more for auto insurance.
A CBS News post cites a new study from the insurance-shopping site CoverHound indicating that, on average, men pay roughly $15,000 over their lifetimes for car insurance. Again, some extreme extremes are highlighted:

For instance, an 18-year-old male living in Nevada would pay an average of $6,268 a year to insure his sedan if he had the misfortune to grow up there. That’s 51% higher than what his twin sister would pay (assuming they have the same grades and driving records), who would fork out just $4,152 to insure an identical car, according to a CoverHound analysis.

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This is all assuming that neither 18-year-old was incorporated in his or her family’s insurance policy, which is a much more cost-effective option than going it alone. In any event, insurance companies justify higher rates for young men because the numbers (and the assumptions) say that guys drive more aggressively and get into more accidents than young women. There are exceptions to the “guys pay more” rule: In a few states, women in the 35- to 50-year-old demographic—who are more likely to have kids distracting them in the car—pay higher car insurance premiums than men of the same age.

As an AOL News story from last fall points out, many of the justifications for charging men more for auto insurance are based on outdated stereotypes. Men have historically gotten into more accidents than women at least partly because they drive more—about 60% of all miles driven in the U.S. But the driving gap is closing: Women account for roughly half of all American drivers today, up from 43% in the 1960s. And yet, even as the numbers show, women are more likely to get into car accidents, there seems to be one big reason why men must pay more:

According to a study by the Johns Hopkins School of Public Health, women were involved in more 5.7 crashes per million miles driven, while male drivers had 5.1 crashes over the same distance. But even though they get into fewer crashes, the Johns Hopkins study said men are three times more likely to die in a car crash.

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By the way, guys aren’t the only group that’s routinely charged more for auto insurance. In another study, released in early 2012, drivers who live in poor neighborhoods were shown to pay $300 to $600 higher premiums than their high-income counterparts—even as poor people tend to drive less, and to drive cheaper (and cheaper to replace) cars. What’s the justification? Partly, it’s the idea that rates for accidents and auto theft are higher in low-income areas. Another theory has it that insurance companies, and many other businesses for that matter, will charge poor people unreasonable amounts extra simply because they can get away with it.

African-Americans and Hispanics pay more for homes.
All other factors being equal, Latino and African-American buyers wind up spending around 3% more than whites on home purchases. That’s the finding of a new report from a team of researchers who utilized data from 2 million home sales in four metropolitan areas. The price differentials, they write, “are not explained by variation in buyer income, wealth or access to credit,” and they “do not vary significantly with the racial composition of the neighborhood or, most strikingly, the race of the seller.” In other words, there isn’t much indication that racial prejudice on the behalf of sellers is to blame.

What’s the explanation then? One theory is that sellers are “willing to accept a lower transaction price from a buyer that they deemed more likely to be able to secure financing and close the deal,” and that either due to assumption or reality, African-Americans and Hispanic buyers often don’t fit the mold sellers are looking for.

(MORE: Study: Poor People Pay More for Auto Insurance)

Another theory has it that, basically, black and Hispanic buyers tend to be inexperienced when it comes to purchasing homes, and they come up short when it comes to negotiating. Researchers write:

The relative inexperience of black and Hispanic buyers, due to the historically lower rates of home ownership among the black and Hispanic households, may contribute to the higher prices that they initially pay upon entering the market.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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