The Lipstick Effect- and other unusual indicators of economic health.

Fashion trends come and go. And so do tough times. From bell bottoms to mini skirts. And from the great depression to the pandemic. But in the midst of ever-changing trends and times, people always indulge. “What is the cost of beauty?”, one may ask, and apparently not even empty wallets and market failures can stop people from wanting perfectly puckered lips. This article delves into the socio-economic phenomenon known as ‘The Lipstick Effect’ as well as other unusual and whack indicators of the economy such as high heels and skirt hems and some history behind them.

The Lipstick Effect:

The Lipstick Effect is the theory that when facing an economic crisis or the economy is in a recession, consumers will be more willing to buy less costly luxury goods. For example, instead of buying expensive fur coats, women will instead purchase expensive lipstick or luxury cologne. The underlying implication is that consumers will buy luxury goods even if there is a crisis. When consumer confidence in the economy is low, people will buy goods that fulfil luxury indulgences without breaking the bank. This serves as a way for people to treat themselves without spending big money. During a crisis, people indulge in simple luxuries as a form of escape and to uplift the generally dim mood.

How high heels go hand in hand with the economy:

If the economy is going down, we may as well stand tall as it happens — and apparently, that’s what history dictates we do anyway. If you’re into fashion I'm sure you've noticed the recent increase in demand for extravagant and taller shoe styles- whether its large block heels or platform boots. What's fascinating about this shift in desire for more flamboyant shoes is that we've seen it before, usually following an economic crisis. The great depression, the oil crisis and now after the arrival of the pandemic. Heels usually go up and stay up in an economic slump, as customers turn to more flashy trends as a form of fantasy and escape.

Diving into a little history and going back a century to the start of the Roaring Twenties, where we witnessed a significant surge in ostentation as a reaction to the austerity that the United States had experienced in the preceding decade. Women’s fashion began to evolve and so did their shoe styles. During the 1920s the most popular women's shoes were the strapped pumps which featured a modest 2 inch heel. And women’s shoes never looked back as heels rose in popularity. During the great depression in 1929, people began to dress less lavishly as a result of obvious monetary issues. But despite this women's shoes continued to evolve and dawned tall heels upto 3-4 inches. This was also when the platform shoe was invented.

In the 1970s, the oil crisis hit the world which led to the downturn of the economy. Resources and money became scarce again. Regardless, the 70s brought about some of the most memorable and iconic fashion trends till date. The platform shoe, which featured huge block heels was unraveled in the 70s, instantly took the fashion world by storm, for women and even men! The 1970s also saw a rise in resistance and protest as people took the streets for women's rights, gay rights and environmental movements, as well as fluctuations caused by the ongoing Vietnam war. Nonetheless, the 1970s went all out in terms of fashion, almost as a form of escapism and fantasy to forget about the turbulent times they were living in.

The hemline index

What do inflation data and skirts have in common? They both show the economy is heating up. Much like the economy, skirt hemlines can go high, low, asymmetric or down to the floor and interestingly enough, both these things seem to change shape together.

The hemline index is a theory that claims that the length of a skirt rises or falls in sync with stock prices. The most widely accepted form of the hypothesis holds that skirt lengths decrease in good times (1920s, 1960s) and increase in difficult times, such as after the 1929 Wall Street Crash. Longer skirts, on the other hand, have been advocated as an indication of success (1950s). It's simple to see why the link has been made: A sweeping skirt conveys humility and frugality, but a glimpse of leg expresses independence and confidence.

In the Twenties, hemlines rose along with stock prices, as previously mentioned, the U.S witnessed a significant surge in ostentation as a reaction to the not so glamorous previous decade. The decade spelled economic freedom. Naturally, women started to reject long and heavy Victorian skirt styles and hemlines became dramatically shorter for the first time. But as wall street crashed in 1929, women inclined towards longer hemlines as they did not possess the resources to experiment and needed more practical options. In the 60s the mini made a return synonymous to the booming economy but reverted again as the 70s witnessed a slump for the economy and a rise in longer, almost floor touching hemlines. By the mid-Eighties, skirts were shorter than ever when stocks achieved new highs, until the early 1990s recession, when rising interest rates and falling property values caused the market to crash.