Lipstick effect
The lipstick effect is the hypothesis that consumers may continue to purchase, or increase their spending on, relatively inexpensive luxuries during periods of economic recession or financial uncertainty, even as they reduce spending on more expensive discretionary goods. The phenomenon is particularly associated with cosmetics and other small indulgences.
The related lipstick index is a proposed economic indicator based on the idea that lipstick sales rise when economic conditions deteriorate. The term was popularised by Leonard Lauder, then chairman of The Estée Lauder Companies, in 2001, following reports of increased lipstick sales during the early 2000s recession.
Although historical sales figures have challenged the reliability of the lipstick index as a predictor of economic conditions, academic research has found evidence for aspects of the broader lipstick effect. These findings do not establish lipstick sales as a reliable economic indicator.
Description
The lipstick effect describes a proposed change in consumer spending during periods of economic difficulty. Consumers who reduce their spending on expensive purchases, such as designer clothing or accessories, may nevertheless continue buying smaller luxuries, such as premium lipstick. Although these products may be relatively expensive within their own categories, they remain more affordable than larger luxury purchases.
Several explanations have been proposed for the lipstick effect. One is that consumers substitute smaller, more affordable purchases for expensive discretionary goods as a way of maintaining enjoyment or treating themselves despite financial constraints. Other proposed explanations concern the perceived benefits of appearance-enhancing products for romantic relationships and professional opportunities.
A 2025 qualitative study of luxury consumption during the United Kingdom's 2022–2024 economic downturn identified escapism, well-being and perceived durability as motivations for luxury purchases. The researchers also observed that participants purchased affordable luxuries outside the cosmetics market, suggesting that the phenomenon need not be limited to beauty products.
The lipstick effect is distinct from the lipstick index. The former concerns consumer behaviour during economic difficulties, whereas the latter proposes that lipstick sales can serve as an indicator of economic conditions. Research examining changes in consumer preferences or the income sensitivity of lipstick demand does not necessarily establish that total lipstick sales increase during recessions.
History
In her 1998 book The Overspent American, economist Juliet Schor discussed the preference for prestigious lipstick brands, including Chanel, as an example of conspicuous consumption. She noted that lipstick is often applied in public, making its branding more visible than that of products generally used in private, such as facial cleansers.
The lipstick index was popularised in 2001 by Leonard Lauder, who suggested that consumers might substitute lipstick purchases for more expensive luxuries during economic downturns. In November 2001, The Wall Street Journal reported that Lauder's index, which tracked lipstick sales across Estée Lauder brands, had risen following the September 11 attacks.
According to market research cited in the same report, lipstick sales at mass-market retailers in the United States increased by 11% from August through October 2001 compared with the corresponding period in 2000. Lauder also claimed that lipstick sales had performed strongly during earlier recessions, including the recession of 1990.
Some accounts have cited a reported 25% increase in cosmetics sales during the Great Depression as historical support for the lipstick effect. However, the wider cosmetics industry's performance during this period was more complicated. In his 2010 history of the global beauty industry, business historian Geoffrey Jones reported that American retail sales of cosmetics and toiletries declined from approximately $378 million in 1929 to $300 million in 1933, while production fell from $193 million to $97 million. The number of firms operating in the industry also declined from 815 to 490 over the same period. These figures concern the broader cosmetics and toiletries industry rather than lipstick sales specifically. Reliable historical figures for lipstick sales remain difficult to establish.
Empirical evidence
Sales data and economic indicators
The proposed relationship between lipstick sales and economic conditions has not been consistent across economic downturns.
During the Great Recession, lipstick sales declined rather than increased. According to market data reported in 2009, lipstick sales fell by 5.8% in 2008, contradicting the prediction that lipstick purchases would increase during an economic downturn.
A 2009 analysis in The Economist, citing data from market research company Kline & Company, found that lipstick sales had increased during some periods of economic distress but had also grown during periods of economic prosperity. The analysis concluded that no clear inverse correlation could be established between lipstick sales and economic conditions.
Market research has also produced differing results during later periods of economic uncertainty. In 2022, NielsenIQ reported declining lipstick sales in the United States amid inflationary pressures, while research cited by The Guardian indicated that British lipstick sales had increased by nearly 10% year-on-year in the 12 weeks ending 18 September 2022.
These variations limit the usefulness of lipstick sales alone as an economic indicator. Changes in fashion, consumer preferences and other market conditions can influence sales independently of the broader economy.
Academic research
A 2012 study published in the Journal of Personality and Social Psychology examined the lipstick effect using historical spending data and experiments. Researchers found that exposure to cues associated with economic recession reduced participants' desire for many consumer products, while increasing women's reported desire for products perceived to enhance their attractiveness. The researchers proposed that economic uncertainty could increase women's motivation to attract partners with financial resources.
A subsequent 2016 study published in Psychological Science investigated additional motivations for the effect. Researchers found that economic concerns could increase women's interest in appearance-enhancing products both for attracting romantic partners and for creating favourable impressions in professional settings. The study found that participants experiencing greater economic concern more frequently prioritised professional appearance than romantic attractiveness.
A 2020 study published in Applied Economics examined weekly retail scanner data on lipstick sales in the United States from 2006 to 2016. The researchers found that the estimated income elasticity of demand for lipstick decreased from approximately 0.31 to 0.05 during the 2007–2009 recession, before gradually recovering to 0.31 by the second quarter of 2014. They interpreted this result as empirical support for the lipstick effect.
The findings suggested that lipstick demand became less sensitive to changes in income during the recession. However, reduced income sensitivity is not equivalent to an increase in total sales, and does not establish lipstick purchases as a reliable predictor of recessions.
Related consumer trends
Nail polish
During the early 2010s, commentators suggested that nail polish had replaced lipstick as an affordable luxury associated with economic uncertainty, leading to discussion of a nail polish index.
A 2011 Reuters report described strong growth in nail polish sales during a period of economic austerity. In France, department-store nail polish sales rose by 42% in 2010, compared with a 2% increase in perfume sales, according to market research company NPD.
Market research company Kline & Company subsequently reported that nail polish had been the fastest-growing category in the United States beauty industry for three consecutive years through 2011. The company also identified changing fashions, product innovation and wider retail distribution as contributing factors.
COVID-19 pandemic
During the COVID-19 pandemic, widespread use of face masks altered demand for cosmetic products. Some commentators suggested that eye makeup, including mascara, might replace lipstick as a small cosmetic indulgence.
However, eye makeup did not experience increased sales in every market. In Japan, retail data collected by Intage showed that lipstick sales from January through October 2020 fell to 44% of their level in the corresponding period of 2019, while eye makeup sales declined more modestly to 88% of their previous level. These changes were associated with mask use and reduced opportunities to wear cosmetics, rather than economic conditions alone.
Other affordable luxuries
The lipstick effect has also been used to describe purchases outside the cosmetics market. During the United Kingdom's 2022 cost-of-living crisis, consumer spending on small indulgences such as chocolate and coffee was discussed alongside demand for inexpensive beauty products.
In November 2025, Reuters reported that analysts had compared growing demand for fragrances among Generation Z consumers with the lipstick effect. Fragrances were described as a relatively accessible form of luxury during economic uncertainty. However, the comparison did not establish that economic uncertainty was responsible for the increase in fragrance sales.