Monday, April 27, 2009

The Lipstick Index

I was browsing in Sephora, and as I reached for a tube of lipgloss, I hesitated because, well, I remembered the Lipstick Index. It's an "economic indictor" that shows that in times of recession, lipstick sales increase: i.e., in bad times, women tend to treat themselves to smaller luxuries to brighten their spirits. This makes economic sense if you consider lipstick an inferior good (a good for which demand decreases when income rises and increases when income falls). 

I'm curious, do you buy this? 

Some evidence to consider...
  • During the Depression, lipstick sales increased by 25 percent.
  • After 9/11, US lipstick sales increased by 11 percent.
  • But, are the above events merely anecdotal? There seems to be no direct correlation in the graph (from The Economist) below. Notice that lipstick sales are also rising with GDP growth.
  • And, just for fun I'll throw in some Google, Facebook, and Twitter trends that I did - inspired by google.org's Flu Trends. Be careful, those spikes you see in 2008 might have to do with Obama's "lipstick on a pig" comment in Virginia during election season. Not surprisingly, Twitterers are rather quiet on the topic.
Google Trends


Facebook Lexicon


Twist (a Twitter trends site)


And for the record, I bought the lipgloss. 

1 comment:

james said...

interesting question.

--yeah, i guess that is the drawback to using sort of the data that we have at our fingertips (search data) as proxies for actual sales, which actually, as you state, seem really unrelated to gdp effects.

AWESOME. really interesting.