Economic growth and economic slowdowns are often judged by dry, mundane parameters that are difficult for the layman to comprehend. Some of these parameters are abound with technical jargon, enough to make the layman uninterested to even try to comprehend these measures. But a little bit of relativity goes a long way. Measuring recessions in terms of lipstick and buttered popcorn can’t be that bad, can it? This article explores some quirky indexes that make use of everyday items to contextualize data that would otherwise go unnoticed.
- The Lipstick Index
The Lipstick Index is a term coined by Leonard Lauder (none other than the chairman of cosmetics firm, Estée Lauder) during the 2001 recession. In the autumn of 2001, the sale of lipstick went up by 11% in USA. Lauder believed that the purchases of lipstick were inversely related to economic growth.
It was speculated that in times of economic hardship, women partook in smaller indulgences (re: lipstick), as opposed to more expensive ones like dresses and shoes.
However, subsequent recessions have proven that the lipstick index cannot be used as an indicator of economic health. During the late-2000s recession, the demand for lipstick actually fell, in line with the slump in economic growth. The increase in lipstick sales in 2001 was attributed to the increase in demand for celebrity-endorsed lipstick brands.
- The Hemline Index
The popular maxim “the shorter the skirt, the better the economy” is attributed to this index put forth by Wharton professor, George Taylor, in 1926. The theory suggested that hemlines on women’s dresses rise along with stock prices. In times of bullish markets (the 1920s and 1960s), miniskirts are in trend. Note that the level of economic prosperity leads the length of hems, and not vice versa (imagine if chopping off a few inches off your clothes could fix the economy). The economic cycle leads hemline length with a time lag of about three to four years.
This correlation is explained by the fact that when an economy is under duress, people have less disposable income to spend on clothing that is not absolutely necessary. As women rejoin the workforce during times like these, they tend to buy more “professional” clothing with longer hemlines. Another explanation is that women could not afford silk stockings during tough times, and invested in longer dresses instead.
- The Buttered Popcorn Index
Conventional economic wisdom suggests that during recessionary times, most industries perform poorly. But one non-essential commodity fares surprisingly well: movies.
Since the Great Depression, movies have performed exceedingly well during times of economic turbulence. “Gone With the Wind”, which is the highest grossing movie of all time (when adjusted for inflation), achieved a large volume of box office sales in 1939, after 10 years of the Great Depression. In 2005, “King Kong” broke box office attendance records despite stagnating unemployment rates.
The only plausible explanation behind the increasing demand for movie tickets with subpar economic growth is that people are looking for ways to distract themselves. Movies serve as an escape from the economic worry and unemployment that a recession can create.
The types of movies that people seek during these times lend credibility to this explanation. It has been observed that comedies and epics fare well during times of economic downturn. During the Great Recession, the Dark Knight raked in over billion and broke the record for an opening weekend.
However, box office revenue is still a trailing indicator. It does not help to predict economic growth of an economy, because any effect that is shown through ticket sales is the people’s reaction to the state of the economy.
- The Romance Novel Indicator
If the economy broke your heart, bury your sorrows in a book. Romance novel publisher, Harlequin, noted that people tend to indulge in romance novels during economic slowdowns. In 2008, right after the Great Recession, Harlequin’s sales went up by 32% from the previous year. This increase in the sale of romantic novels was also noted during the recession of the early 90’s. Uplifting stories offer a haven, an escape for people to vicariously live their lives through the lives of the characters.
- Baby Diaper Rash Indicator
The average American baby’s bottom sees 6.3 diapers in a day, and parents shell out nearly on diapers alone, in a year. Historical data has shown that even in times when the number of babies falls, during economic slumps, the sale of diaper rash creams accelerates, while the sale of disposable diapers slides. This is done in a hope to save money, parents of young children try to cut costs by changing their children’s diapers fewer times in a day. This indicator is measured by the fact that while the sale of diapers plummets, the sale of diaper rash cream goes up.
The purview of public and private data-gathering agencies is usually economic reports that are utilized widely by the business world. But the abundance of data on seemingly infinite topics can give rise to completely absurd correlations.
So for those of us that do not like reading newspapers in order to learn about the economy, we can turn to movies, hemlines, lipstick and so much more.
Links for further reading
Browne, Desiree. “Is Poor Economy to Blame for Rise in Diaper Rash?” CNN, Cable News Network, 12 Sept. 2011, edition.cnn.com/2011/09/12/health/poor-economy-diaper-rash-p/index.html.
“Everyday Life Can Be an Economic Indicator.” The Washington Post, WP Company, 12 July 2009, www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100677.html.
“High-End Brands Are All About Beauty These Days.” Bloomberg.com, Bloomberg, 3 June 2016, www.bloomberg.com/gadfly/articles/2016-06-03/luxury-lipstick-index-is-bad-sign-for-premium-brands.
Holodny, Elena. “54 Bizarre Ways You Can Track The Economy.” Business Insider, Business Insider India, 23 Nov. 2014, www.businessinsider.in/54-Bizarre-Ways-You-Can-Track-The-Economy/articleshow/45252947.cms.
Insider, Business. “The 40 Most Unusual Economic Indicators.” Financial Post, 21 Feb. 2013, business.financialpost.com/business-insider/the-40-most-unusual-economic-indicators.
Jones, Candice Lee. “10 Quirky Economic Indicators.” Www.kiplinger.com, Kiplingers Personal Finance, 31 May 2009, www.kiplinger.com/article/business/T019-C000-S001-10-quirky-economic-indicators.html.
Lewin, Tamar. “A Hemline Index, Updated.” The New York Times, The New York Times, 18 Oct. 2008, www.nytimes.com/2008/10/19/weekinreview/19lewin.html.
“Lip Service.” The Economist, The Economist Newspaper, 23 Jan. 2009, www.economist.com/node/12998233.
McDowall, Robert. Home, www.longfinance.net/news/long-finance-blogs/926-the-hemline-index.html.
Podkowski, Richard. “Richard Podkowski.” MMM, 1 Sept. 2016, j469.ascjclass.org/2016/09/01/economic-indicator-the-buttered-popcorn-index/.
Sauers, Jenna. “The Hemline Index Is a Myth. So Why Won’t It Go Away?” Jezebel, Jezebel.com, 23 Feb. 2012, jezebel.com/5887427/the-hemline-index-is-a-myth-so-why-wont-it-go-away.
“What Is ‘the Lipstick Index’ and Why Is It Important Right Now?” The Fashion Law, www.thefashionlaw.com/home/premium-beauty-what-is-it-and-why-is-it-so-important-right-now.
Yu, Yifan. “Hemline Index Actually Works! Just Not the Way You Thought.” Medium, UpstartCity, 25 Sept. 2016, medium.com/upstartcity/hemline-index-actually-works-just-not-the-way-you-thought-127254594716.