Lipstick index
Encyclopedia
The lipstick index is a term coined by Leonard Lauder
, chairman of the board of Estee Lauder
, used to describe increased sales of cosmetics during the Early 2000s recession
. Lauder made the claim that lipstick sales could be an economic indicator
, in that purchases of cosmetics - lipstick
in particular - tend to be inversely correlated
to economic health. The speculation was that women substitute more expensive purchases like dresses and shoes for lipstick in times of economic distress.
Lauder identified the Lipstick index as sales across the Estee Lauder family of brands. Subsequent recessions, including the Late-2000s recession, provided controverting evidence to Lauder's claims, as sales have actually fallen with reduced economic activity. Conversely, lipstick sales have experienced growth during periods of increased economic activity. As a result, the lipstick index has been discredited as an economic indicator. The increased sales of cosmetics in 2001 has since been attributed to increased interest in celebrity-designed cosmetics brands.
Leonard Lauder
Leonard A. Lauder is chairman emeritus of The Estée Lauder Companies Inc. He was chief executive until 1999. Today Estée Lauder operates several brands in the cosmetics industry including Estée Lauder, Clinique, MAC Cosmetics, Aveda, Bobbi Brown and La Mer...
, chairman of the board of Estee Lauder
Estée Lauder Companies
Estée Lauder Companies, Inc. is a manufacturer and marketer of prestige skincare, makeup, fragrance and hair care products. The company has its headquarters in Midtown Manhattan, New York City.-History:...
, used to describe increased sales of cosmetics during the Early 2000s recession
Early 2000s recession
The early 2000s recession was a decline in economic activity which occurred mainly in developed countries. The recession affected the European Union mostly during 2000 and 2001 and the United States mostly in 2002 and 2003. The UK, Canada and Australia avoided the recession for the most part, while...
. Lauder made the claim that lipstick sales could be an economic indicator
Economic indicator
An economic indicator is a statistic about the economy. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles....
, in that purchases of cosmetics - lipstick
Lipstick
Lipstick is a cosmetic product containing pigments, oils, waxes, and emollients that applies color, texture, and protection to the lips. Many varieties of lipstick are known. As with most other types of makeup, lipstick is typically, but not exclusively, worn by women...
in particular - tend to be inversely correlated
Correlation
In statistics, dependence refers to any statistical relationship between two random variables or two sets of data. Correlation refers to any of a broad class of statistical relationships involving dependence....
to economic health. The speculation was that women substitute more expensive purchases like dresses and shoes for lipstick in times of economic distress.
Lauder identified the Lipstick index as sales across the Estee Lauder family of brands. Subsequent recessions, including the Late-2000s recession, provided controverting evidence to Lauder's claims, as sales have actually fallen with reduced economic activity. Conversely, lipstick sales have experienced growth during periods of increased economic activity. As a result, the lipstick index has been discredited as an economic indicator. The increased sales of cosmetics in 2001 has since been attributed to increased interest in celebrity-designed cosmetics brands.