Lipstick effect

The lipstick effect is the theory that when facing an economic crisis consumers will be more willing to buy less costly luxury goods.^[1] Instead of buying expensive fur coats, for example, people will buy expensive lipstick.^[2] The underlying assumption is that consumers will buy luxury goods even if there is a crisis. When consumer trust in the economy is dwindling, consumers will buy goods that have less impact on their available funds. Outside the cosmetics market, consumers could be tempted by expensive beer or smaller, less costly gadgets.

It has been rumored that lipstick sales doubled after the 9/11 attacks on the United States;^[3] however, other sources^[who?] say this is an overstatement. In a New York Times article published May 1, 2008, Leonard Lauder is quoted as saying that he noted his company's sales of lipstick rose after the terrorist attacks.^[4] He did not claim they doubled. Juliet Shor in her book The Over Spent American talks to consumer's purchase of higher-priced, more prestigious lipsticks, specifically Chanel, that are used in public, vs. lower-priced, less prestigious brands that are used in the privacy of the bathroom.

More recently, however, a more nuanced view of the effect has come to light, rooting it in a pre-historic urge to preserve the species. The Economist tested the lipstick effect in 2009 with statistical analysis. "Not everyone is convinced," said the newspaper. "Reliable historical figures on lipstick sales are hard to find, and most lipstick believers can only point to isolated, anecdotal examples as evidence of the larger phenomenon. Data collected by Kline & Company, a market-research group, show that lipstick sales sometimes increase during times of economic distress, but have also been known to grow during periods of prosperity. In other words, there is no clear correlation."^[5]

In a recent study by four university researchers, the effect is attributed to evolutionary psychology: "This effect is driven by women’s desire to attract mates with resources and depends on the perceived mate attraction function served by these products. In addition to showing how and why economic recessions influence women’s desire for beauty products, this research provides novel insights into women’s mating psychology, consumer behavior, and the relationship between the two. ... Although the lipstick effect has garnered some anecdotal lore, the present research suggests that women’s spending on beauty products may be the third indicator of economic recessions—an indicator that may be rooted in our ancestral psychology."^[6]

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