Prices and Personhood: Gender, Race, and the Social History of Risk-Based Pricing

This article was originally featured in the Fall 2015 issue of Genderscapes, IRWG's annual newsletter.

In exploring the surprising persistence of gender-based pricing in insurance markets, Greta R. Krippner (Associate Professor of Sociology) and Daniel Hirschman (Ph.D. candidate Sociology) relied on support of a Faculty Seed Grant from IRWG to conduct extensive archival work at the Schlesinger Library at Harvard University.

Insurance is one of the few domains in American life where, as Mary Heen, a long-time observer of the industry, noted in the New York Times, “discrimination on the basis of sex is not only permitted but virtually required.” Across most lines of insurance, similarly situated men and women can expect to pay different prices for access to coverage – a practice that insurers see as integral to requiring each individual to pay for her “unique” risk. Insurance, it appears, has been left behind by the civil rights revolution that has transformed how Americans exchange goods and services in the marketplace over the last half century.

The notion that each individual should “bear the cost” of the risk she represents is so pervasive in ways of thinking about how we manage misfortune that it forms a kind of common sense in modern market societies. If you are a smoker, you can expect your health and life insurance premiums to reflect your greater likelihood of disease and early mortality. If you have defaulted on a loan, you can expect a higher mortgage payment. These examples are relatively uncontroversial as they describe situations where the risk that an individual will incur some misfortune is shaped by behaviors perceived to be directly controlled or chosen by that individual. But the principle of bearing one’s own risk also extends – at least potentially – to situations where the risk in question is not “chosen” but shaped by an individual’s gender, race, class, and sexual identity.

The idea that each individual should “bear the cost” of her own riskiness has a history of contestation that demonstrates that alternative ways of thinking about how risk is distributed were – and are – possible. Krippner and Hirschman explore one such moment of contestation in depth: the feminist campaign beginning in the mid-1970s and extending through the mid-1990s to end the use of gender classifications in the pricing of insurance.

Krippner and Hirschman draw on the papers of the National Organization for Women (NOW) and its affiliates to investigate the sustained legal campaign that NOW launched against insurance industry giants such as Mutual of Omaha (referred to as “Mutual of Macho” by feminists), Metropolitan Life, and State Farm. In taking on this fight, feminists initially had the wind at their backs, having recently secured federal legislation banning gender discrimination in credit markets. But feminists’ efforts were defeated by intransigent insurers through protracted legislative and judicial battles.

Krippner and Hirschman stress, “our purpose is not to explain feminist failure per se, as much as to understand what this experience tells us about the broader history of risk-bearing in the twentieth-century United States.” Most notably, they argue that it is the origins of the insurance contract in mutual traditions that attempt to share risk broadly across a collectivity that explains insurers’ reliance on facially discriminatory classifications long considered inappropriate (and in fact illegal) in other markets.

As they put it, “the most socially progressive aspect of insurance – its collectivization of risk – begets the least socially progressive aspect of insurance – its rigid adherence to gender classifications.”