Why the Cheap Haircuts?

I’ve been mystified by the abundance of beauty parlors/barbershops in Germany — and by the low prices I’ve paid for their services.

At home I pay $35 for a haircut by my wife’s hairdresser (nearly $1 per hair). Here, for an equal-quality haircut I pay $13 ($17).

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Why so low a price; why so many shops?

Apparently haircuts used to be much more expensive; my Berlin colleague paid $15 (DM30) in 1994, and now he pays $8.

It used to be that every hairdressing shop required a licensed master hairdresser to supervise others. Today, licensing rules are less stringent; it’s easy to open a shop on your own, without supervision.

With the expansion of the E.U., Polish hairdressers have entered the German market, shifting the supply curve far to the right and lowering prices drastically. Not surprisingly, the effect has been bigger in Berlin (near Poland) than in Bonn (far west in Germany).

Who’s hurt by this price drop?

Polish hairdressers are better off, as are German consumers. Young German hairdressers entered the field knowing full well what the prices are, so they can’t be worse off.

The only losers are older German hairdressers, who expected high prices when they entered the field; they’ve suffered a shock to their earnings because loosened restrictions on entry into the market have reduced prices — a classic illustration of the few being hurt by increased competition, while the many gain a little.

(Hat tip: Michael Burda)


Tom

Allowing free migration of labor enriches both the general public and the migrant, particularly if you don't offer the rich world social benefits (health care, old age pensions, etc.) to the migrant on a work visa. Yes, the rich world worker who is displaced suffers, but he would be displaced eventually, anyway. This just speeds up the transition. It is important to remember the rich world, so fond of its human rights declarations, would do more for the poor world be allowing economic migration than all of the poverty/assistance/development plans ever conceived. And it would help our economy. Treating people born elsewhere differently by closing borders is no different than apartheid, and all those who practice closed borders while proclaiming their respect for human rights should be treated as the hypocrites they so clearly are.

iampriteshdesai

Here in India I pay $0.5
Yup you read that right, 50 cents!

RNB

Why the cheap haircuts? The answer is obvious - but unpalatable.

http://ranaban.blogspot.com/2008/09/third-world-economics.html

It is a prime example of what's wrong (?) with the world. In my part of India, only ten minutes drive from an international airport, the going rate for a men's haircut is still only fifteen cents (not 50 as some quote above). In the UK, standard basic price is the equivalent of 15 dollars ...

... yet the prices of land, housing, food and energy are not so vastly different in the two countries. What are the implications of that?

Alex

Hm. I pay $80 and I think $35 would be the going rate. Then again I'm in NYC.

Don

$7 for a cheap set of clippers from Wal-Mart = 5 year's worth of free haircuts from my wife for me and my two boys.

tomas

and to paul... I've seen Sweeney Todd too many times to allow someone to shave my neck.

tomas

If haircuts were that cheap in America, John Edwards could have saved enough money to finance a winning campaign for Kerry.

TS

In Seattle, I pay $25 + a $5 tip, and it's worth it.

I've got Mediterranean-heritage curly hair, halfway to an afro.

The problem is that your typical $10-$15/cut place doesn't know how to cut this kind of hair. They cut it to length but don't know how to adjust for the curl. I end up looking like a cross between broccoli and someone who's touching a Van der Graff generator.

The secret is knowing how to cut curly hair with a straight razor, and I'm willing to pay a bit more for the expertise.

Eric Ho

I like #13, but I am with #1. I was about to suggest 50 Rupees in India but it seems even that is above market price (#20).

olga lednichenko

great to see - free markets -mean free movement of labor - sometimes.

cheers
olga lednichenko

Ang Li

Some of the higher-class hairdressers in Canada do charge upwards of $30 for a haircut.

Andrew

Here in the UK homogeneous, entry-level haircuts for men are about ?10, so about the same as the one you found cheap. And whilst there's been plenty of Polish immigration, it hasn't really affected supply of hairdressing; there's always been loads of hairdressers.
I think the key issue is men vs women. Unless hairstyles go drastically bigger (and they are a bit here), cutting men's hair is not that tricky. Low barriers to entry, similar quality of product, ability to switch provider etc etc - nearly perfect competition with consequent low, near-uniform prices. This is different for women, where skill, relationship with particular hairdresser and volume of hair make for a more complex market.
On the hairstyles front, as I teacher I get to see what's coming along, and boys' hair is getting bigger and messy. I imagine this will reduce frequency of haircuts, lowering demand and hopefully lowering prices. On the other hand it might make the market more like the women's.

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JD

I am in the extreme minority among my female friends as far as haircuts go. I think any haircut costing more than $25 is overpriced. I generally pay $12-$14, going to one of the mass volume shops, and I find they do a perfectly adequate job.

However, most of my female friends find it reasonable to pay upwards of $45 for a cut alone, and when you throw in color, they regularly pay $100-$150.

I don't think it is a matter of countries but of preference and subjective interpretation of quality.

Steven

$35 sounds quite steep for a bald man's haircut. No offense!

Michael P

I noticed this when I moved to Berlin. It was strange to me - as an American - that this service for $10 cuts would be cheaper than what I was used to paying in Washington, D.C. ($40-ish) and even in Mississippi where I'm from ($20).

Danke für die Einsicht!

Ken

Okay, so the masterbarber is no longer needed, she should start a blog. The rate of infections increased and govermentintervention was required, and an unsuspecting public became exposed to contageous disease.

Anonymous Coward

"At home I pay $35 for a haircut by my wife's hairdresser "

Hairdressers != Barbers

The idea that you get your hair cut @ hairdressing place, or worse yet...a salon, I find revolting.

Men should go to barbershops.

Ted

Out here in the small town, I get my haircut for $10, but the barber will always play a 5 card draw for double or nothing. Sometimes free, sometimes $20, but the average is just about $10. If I try to tip him more than $2 he objects. But hey, Christmas is coming and he has another trip to Europe scheduled.

kalind

This is an outrage! Come to India and u can get a haircut for less than 0.5 $. :-)

the Gooch

Wait, so you're saying by reducing regulation, you allow for more employment of poor people...and those same poor people now can afford goods they couldn't before?

Maybe the newly elected 'party of the little guy' should take notice...

But, many places now require a license to be an interior designer, too.

Read about the idiocy here:
http://www.ij.org/images/pdf_folder/economic_liberty/Interior-Design-Study.pdf