The Lipstick Effect in economics has always fascinated me. The Lipstick Effect theorizes that consumers will spend on little luxuries in the midst of hard times for a pick me up. Despite economic downturn, people will be willing to part with their money for small trinkets meant to bring comfort or some sort of positive emotion.
Looking back to war times where lipstick production was not affected, women were encouraged to wear Victory Red lipstick to signify American pride and a love for democracy. Many American Presidents have urged the American public to go out and spend money to keep the economy going. It’s quite troubling when people spend money they don’t have to support businesses when they are struggling to support themselves, but I will save my disdain for mindless spending for a different blog post. Think of post-COVID spending. The luxury market was booming in the first quarter after lockdowns because people were itching to spend their money, despite a massive shift in the world economy and logistics.
In fact, I’d venture to say that with viral TikToks and other other social media content, “small luxuries” have become the norm, regardless of economic downturn, and that people will purchase non-essential branded items because of the hype and as a feeble attempt at community. But more on that another time.
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