Lipsticks are more than just a colorful tint for your pout. Here's how these little tubes can be economic predictors and pick-me-ups during uncertain times.

By Hiranmayi Srinivasan
July 20, 2021

"Put on some lipstick, and pull yourself together," Elizabeth Taylor was famously quoted as saying. Turns out, that advice rings true for many—especially in times of turmoil and uncertainty. Lipstick sales can actually be an indicator for how the economy is doing—a theory known as the lipstick index or the lipstick effect. Read on to learn about the history of the lipstick index and what it means for our post-pandemic world.

The Lipstick Effect

The lipstick index was first proposed by Leonard Lauder of cosmetics company Estee Lauder in 2001. In the wake of the 9/11 attacks, Lauder noticed that his company's lipstick sales had increased 11 percent, despite the recession. The lipstick index theory claims that an unstable economy leads people to buy more small, affordable luxuries, such as lipstick and other cosmetics—because they can't afford more expensive items but are looking for that splurge feeling.

"Advocates of this theory noted that cosmetic sales actually increased substantially during the Great Depression in the 1930s," says Robert R. Johnson, PhD, CFA, and professor of finance at Creighton University.

There have been several studies over the years that have found that lipsticks do more than just add a pop of color to your lips. One study done by Edith Cowan University found that of the 300 women who participated, 85 percent said they felt "very confident" after wearing lipstick, with 82 percent saying they "felt really good about themselves."

A 2016 survey conducted by Harvard University tested the lipstick effect in academics. They had 186 undergraduate students take a university exam with one group wearing makeup, one listening to positive music, and another group coloring. The study found that the group that had makeup on outperformed those that weren't wearing makeup and the ones who were coloring. While the lipstick didn't inherently make them smarter, the self-esteem boost that can come with lipstick likely did the trick—studies have shown that higher self-esteem and better academic performance are connected.

Post-Pandemic Lipstick Sales and Other Small Luxuries

The lipstick theory has been somewhat relevant post-pandemic. According to a CNN report based on numbers from market research firm IRI, lipstick sales had increased 80 percent more this April than in April 2020.

"Buying small luxuries offer people a valuable sense of comfort and continuity in times of uncertainty and becomes more common during periods of economic recession," says Helen Jambunathan, anthropologist and associate insight director at consumer insights agency Canvas8.

Lipstick hasn't been the only item people are indulging in. Jambunathan says there has been an increased demand for household items—like premium candles—through the pandemic, as people looked to (inexpensively, considering) upgrade the spaces they were suddenly spending so much time in. Dyson and Breville saw a high demand for their espresso machines as people rushed to buy new homeware. "Not only are these seen as small, affordable luxuries, but the scarcity of some products is transforming them into smaller 'investment' pieces."

Other small luxuries people invested in during the pandemic include products for at-home manicures and DIY facials instead of trips to the salon or spa, says Johnson. An analysis by McKinsey & Company on the beauty industry and COVID reported that nail-care sales on Amazon were up 218 percent last April.

Does the theory still hold up?

But does the lipstick theory truly apply for the current pandemic—and is it really the accurate economic measure Lauder once thought it was? Johnson says the increased lipstick sales we're seeing right now are likely due to higher rates of vaccination and opportunities to gather and go mask-free: "We are actually witnessing a strong recovery in the economy now," Johnson explains, "and lipstick sales are increasing because people feel more comfortable in public."

As a makeup aficionado myself, I too have been excited to finally break out my lipstick again without the fear of it ending up all over my face and mask—and, yes, I've picked up a few new tubes recently. But again, whether the surge in lipstick sales is due to economic uncertainty or simply because people are feeling better about showing the lower half of their face in public...that's up for debate. Clearly, lipstick wasn't the only self-care item people invested in mid- to post-pandemic. And while the economy is recovering, many individuals are still dealing with the financial fallout from COVID such as unemployment, loss of benefits, and expensive medical bills.

"The real test will come when we return to more normal times," says Johnson. "Will people go back to nail care salons or in-person fitness studios in the same numbers, or will there be a new normal?"

As more and more consumers ditch that at-home gel mani equipment they bought during the pandemic and head back to the IRL salons, it will definitely be interesting to see new trends that emerge as we continue to recover—physically, socially, and financially.

Lauder's lipstick index might not be entirely relevant to our current scenario, but indulging in the little things that bring us joy is something we have collectively done for ages. As long as your self-care doesn't entail spending beyond your means, a little treat here and there can be a good thing for our collective psyches—and our economy.