Tough times don’t touch lipstick sales; here’s what makes them recession-proof

If you're okay skipping those new Nike kicks but can’t resist that perfect coffee-toned lipstick to match your work outfit, the economy might be subtly shaping your choices. Welcome to the world of the Lipstick Effect, where small indulgences take centre stage when times get tough.

Lipstick could be a more telling cue of downturns than rising hemlines

Much like how people often revisit nostalgic pop anthems like Kesha’s Tik Tok or J.Lo and Pitbull’s On the Floor when things get rough, small, comforting purchases — like a new lipstick — help people feel a little better without blowing the budget.

This term was popularised by Leonard Lauder, chairman of Estée Lauder, in the early 2000s. He noticed that lipstick sales actually increased during economic downturns, a surprising pattern during a time when most industries were struggling.

It is an idea similar to the theory about skirt hemlines. Back in 1926, economist George Taylor came up with the Hemline Theory Index (HTI), which suggests that skirt lengths rise in good times and fall in bad. 

In 2010, Dutch economist Marjolein van Baardwijk analysed skirt lengths from 1921 to 2009 and found that hemlines tended to rise about three years before an economic boom and fall three years before a downturn. 

However, the Lipstick Effect may be a more reliable indicator of economic sentiment, especially outside the West. A 2019 study published on Taylor & Francis analysing consumer behaviour from 2006 to 2016 found that during the 2007–2009 recession, the demand for lipstick became far less sensitive to income changes. 

The "income elasticity" dropped from 0.31 to just 0.05 — meaning people kept buying lipstick even as their incomes fell. By mid-2014, that sensitivity returned to pre-recession levels, reinforcing the idea that the lipstick effect is real and trackable.

And it's not just about lipstick. Small, affordable luxuries — from a cosy scarf to a scented candle — often replace more expensive splurges when budgets tighten. They offer a sense of care, control, and even luxury without the guilt of overspending.

So, if you’re worried about overspending when your chai consumption has gone down, don’t feel guilty. You deserve a little beauty treat now and then.