#lipstickindex

Can small purchases reveal big economic trends?

The Lipstick Index is a behavioral economics concept that explores how consumer spending patterns may shift during uncertain times.

In this video, we explain what the Lipstick Index means and why economists and analysts find it interesting while observing economic sentiment and consumer behavior.

It has been decreed by science. Well economics (if you consider that a science, yes I know some people consider it closer to astrology).

However in the economics world, this theory is called the lipstick index and is backed up by consumer data collected since the Great Depression.

The theory states that in times of economic downturn or recession, people are forced to cut back on discretionary spending, and as a result, instead of purchasing expensive products, they instead buy themselves a cheap little treat (notably lipstick). This has been hypothesised as a way to improve their mood, make them feel pretty or generally attempt to beat off the doom and gloom of capitalism.

Estee Lauder noted this trend and tracked it to just before, and during all of the major and minor recessions in the US since 1929 (Lip product sales have increased by 28% since last quarter at the moment.)