The myth of seniors’ prices

Seniors do not need lower movie prices.

For the first time in almost seven years, I went to a movie in a cinema recently — Project Hail Mary, if you must know. When purchasing my ticket online, the menu offered a reduced senior price, a widespread practice in the retail and service industries. My mouse hovered over the price options as I debated whether to select the lower senior’s price I qualify for, or choose the regular fee, thereby registering my principled objection to this practice.

Hypothesis No. 1 is that Cineplex is genuinely concerned about the welfare of Canadian seniors and so offers us a price break. Call this the altruistic theory. However, while I appreciate the gesture, the seniors’ discount is irritating and wrong.

First, it is unenforced. Anyone can select the option with almost zero chance of detection. The bored teens who wave their electronic readers over my phone just want to hear the confirmation beep. Even if they were to glance up and try to align the price with my age, those under 20 are notoriously bad at estimating the age of anyone over 30.

What is to stop a 50-year-old from paying the discounted price? Or a 20-year-old? I have no idea how many falsely claim the lower price, but does Cineplex? One possibility is that it has a two-tiered price for the optics, quietly acquiescing to the customary practice of offering a price reduction to seniors because they are poorer than the rest of Canadians.

A pervasive assumption is that seniors are poorer than the rest of the population, but poverty rates for Canadian seniors are both lower and falling faster compared to other age groups. The most recent Statistics Canada data (2023) reveal that 5.5 per cent of those over 65 are in poverty, compared to 12.2 per cent of those between 18 and 64.

Certainly, seniors have lower incomes than Canadians aged 24 to 65. However, seniors have raised their children, contributed to pensions for decades and paid off their homes. Their net worth is high, comprising financial assets such as registered pensions, homes and other investments that generate passive income.

Low-income seniors do exist, but compared to low-income families with children, who deserves a price break on a movie more? If you say both, then under the altruistic model, Cineplex will need to examine its customers’ income tax records. That presses against privacy norms and is expensive.

But what if we turned the problem on its head? Hypothesis No. 2 is that Cineplex is a rational capitalist, and if so, we can assume it has a detailed understanding of its customers.

Imagine that the senior’s price reflected the base cost recovery, or what economists call normal profit. This is the profit that covered all costs and provides a level of profit comparable to other investments of similar risk.

Under this view, the regular price reflects a surcharge applied to those between 14 and 64. In fact, Cineplex uses a sophisticated pricing model that initially reflects expected demand and that it adjusts downward to maintain attendance through the run. For example, as of this article, the regular price for the upcoming movie Michael is $23.25, which will fall if early reviews are weak and advance ticket sales are low. The higher price will remain if enough bums fill the seats. In the same way, international movies, typically Hindi and Punjabi releases, are set a couple of dollars lower, reflecting lower audience numbers.

Cineplex’s pricing is also inventive, such as Monday surprise premières, periodically announced through social media, where for $8.99 you get to view a new unreleased film, knowing only its rating before the lights go out and the film begins. This fills seats on the typically slow Monday and is also sophisticated marketing, as advance “buzz” can boost interest.

So, under this alternate view, Cineplex is pricing seniors’ tickets lower, not out of social conscience; rather, as part of the entire movie price structure designed to maximize profit, which is as it should be.

One final view is that Cineplex is accommodating the entitlement of seniors, who have come to expect preferential pricing. If it charged seniors the same as the regular price, the entire price structure could be lower, even by a small amount. In this view, the rest of the moviegoers are subsidizing seniors, who do not really need it.

As for my mouse hovering between the two price options, did I uphold my principles and select the regular price, or did I choose the lower seniors’ price? Well, only my therapist knows, which is as it should be.

Gregory Mason is an associate professor of economics at the University of Manitoba.