The lipstick effect is an economic phenomenon in which consumer spending disproportionately increases during economic downturns, typically on small luxury items. Examples of such items in the early 2000s included clothing, handbags, and cosmetics, particularly lipstick. This economic phenomenon dates back to the Great Depression in the early 1900s and has resurfaced many times in multiple economies around the globe.
The term lipstick effect first appeared in 1878, when William Stead noted Why Women Spend so Much on Clothing in which he reasoned that during hardships, women prefer to purchase items like lipstick which can make them appear their best instead of frumpy and depressed. Additionally, such items are generally seen as an inexpensive luxury, since they offer a psychological boost without breaking the bank.
In the early 2000s, the lipstick effect gained more attention when it existed during the Great Recession of 2007–2009. This trend rose as luxury items, such as lipstick and other cosmetics, remained relatively affordable when compared to other products on the market. The prevalence of designer makeup brands, such as Mac, offered prestige and quality and allowed individuals to show their sophistication and class while still staying within their budget.
The lipstick effect was similarly observed during the 2020-2021 pandemic as well. As individuals faced the economic turmoil of the pandemic, many looked to small luxuries as a way to improve their moods. As the cosmetics industry grew rapidly in the early 2000s, it saw an even larger boost during the pandemic with beauty and skincare companies experiencing an unprecedented surge in sales.
The COVID-19 pandemic has revealed that the popularity of the lipstick effect extends beyond just economic downturns. The pandemic has highlighted the importance of self-care and self-love, as individuals look for ways to pamper themselves and take a break from the chaos happening in the world. As the term ‘self-care’ has become more common, the trend of using small luxuries like lipstick to boost ones mood has grown rapidly in recent years.
The lipstick effect is a perfect example of how small luxuries can make a big difference during difficult times. As the effects of the Great Recession, 2020-2021 pandemic, and other economic downturns have shown, the desire to take comfort in small luxuries will only increase as times become more difficult. For individuals looking to ease the stress of tough times, a small purchase of something like lipstick can be an excellent way to do so.
