When inflation rises, everyday items—from rent to food—get more expensive. That pushes big dreams like vacations, new cars, or home ownership further out of reach.

u7114744992_A_silhouettewalking_past_a_departmental_store_win_b390a183-f088-4982-ad5a-d599a54b06a4_3.png

When budgets shrink, you'd expect people to cut ‘luxury’ (wants) spending too, right? But one product keeps breaking this rule: lipstick.

During a recession, most luxuries take a hit. Not lipstick.
Economists call this an affordable luxury—a small splurge that offers joy without breaking the bank.

Consumers trade large, expensive luxuries for tiny indulgences.

u7114744992_A_minimalist_piggy_bank_with_a_single_lipstick_tu_415579a9-54bd-4994-8d4c-b3de2ed93e48_1.png

The theory started with economist Juliet Schor in The Overspent American (1998).
Schor noticed that women would skip pricey skincare, but still splurge on brand-name lipstick.

These purchases do more than brighten up your face.

They have a positive psychological impact, helping people feel in control, attractive, or simply “normal” during stressful times.

It’s a little hope for better times, in your pocket.

This is why beauty sales sometimes go up during downturns.

It’s a counterintuitive twist in economics: when money is tight, we expect spending to fall. But in some categories, emotional value drives behavior more than logic.

u7114744992_a_mannequin_holding_a_lipstick_showing_control_wi_e28517cd-5431-4765-942b-f6ee5a685b66_0.png

Leonard Lauder, chairman of Estée Lauder, coined the term Lipstick Index in 2001.
In 3 dire economic situations: After 9/11, lipstick sales jumped. Again in 2008. And again after COVID—when people looked at themselves on Zoom all day.

But post-pandemic market data showed a shift: It debunked the reliance on this index.
Consumers spent more on skincare, nail polish, and fragrances—products better suited to private, at-home use.

Economists began tracking new indicators like

Nail Polish Index,
Cardboard Box Index,
Beard Gauge.

These reflected how people adapted their spending habits to a new normal.

The conclusion?
Economic indicators aren’t fixed.
They evolve as our needs, habits, and environments change.

Fun Fact:

Pet spending didn’t drop in the 2008 crash. In fact, people treated their pets even better—an example of emotional spending.