What is the lipstick effect?
The lipstick effect describes consumers in a downturn swapping expensive luxuries for small, affordable indulgences. It was popularised in the 2001 U.S. recession when Estée Lauder’s Leonard Lauder cited lipstick sales as a "leading lipstick indicator."
📌 At a glance
- Popularised by
- Leonard Lauder (2001)
- Core idea
- Small luxuries rise in recessions
- Related
- Affordable luxury, compensatory spending
- Caveat
- Inconsistent support in sales data
Explanations
Small treats offer comfort at low cost. Hill et al. (2012) found in experiments that women exposed to recession cues showed greater preference for appearance-enhancing products.
As an indicator
Sales evidence varies across recessions, so the lipstick effect is better seen as a consumer-psychology idea than a reliable economic indicator. Compare the Veblen effect.
Frequently asked questions
- What is the lipstick effect?
- Increased spending on small affordable luxuries, such as lipstick, during economic downturns.
- Is the lipstick index reliable?
- Not very; sales data do not consistently show it across recessions.
References
- Hill, S. E., Rodeheffer, C. D., Griskevicius, V., Durante, K., & White, A. E. (2012). Boosting beauty in an economic decline: Mating, spending, and the lipstick effect. Journal of Personality and Social Psychology, 103(2), 275–291.