With Recession Threatening, The Lipstick Effect Kicks In And Lipstick Sales Rise

In beauty circles, the Lipstick Effect, also called the Lipstick Index, is claimed to be the category’s leading economic indicator. The concept is that in times of a recession and other economic stresses, women will indulge in discretionary purchases that provide an emotional uplift without breaking the budget. Lipstick fits the bill.

While the lipstick effect may not hold much sway in traditional economic circles, new data from global market tracking firm NPD Group finds sales of lipstick and other lip makeup grew more than twice as fast as other products in the category during the first quarter over previous year.

And lipstick sales keep on growing week-by-week with prestige brands taking a bigger share of sales than the mass-market brands. Women are also picking up brighter, more dramatic colors this year, rather than muted, natural looks.

“Lipstick is transformational,” Larissa Jensen, NPD vice president and beauty industry advisor, shared with me. “It’s easy and quick, unlike eye makeup which takes time to apply. Lipstick is super-powerful because it can immediately transform your face unlike anything else. A simple swipe on the lips makes your face pop.”

Origins of the lipstick effect

The lipstick effect was posited first by economics and sociology Professor Juliet Shor in her 1998 book The Overspent American. She found when money is tight, women would splurge on luxury brand lipsticks that are used in public, like semipublic restrooms and after dinner in a restaurant and forego higher-priced beauty products that are applied in the privacy of home, like facial cleansers and eye makeup.

“They are looking for affordable luxury, the thrill of buying in an expensive department store, indulging in a fantasy of beauty and sexiness, buying ‘hope in a bottle.’ Cosmetics are an escape from an otherwise drab everyday existence,” she wrote.

In 2001, Leonard Lauder, chairman of Estee Lauder, supplied anecdotal evidence of the lipstick effect when he reported his company saw a spike in lipstick sales after the 9/11 terrorist attacks. He doubled down on the message after the recession of 2008 reporting once again a rise in company lipstick sales.

Uncovering lipstick effect psychology

An academic study led by Texas Christian University professors Sarah Hill and Christopher Rodenheffer lent further credence to the lipstick effect theory.

In the study entitled “Boosting beauty in an economic decline: mating, spending and the lipstick effect,” the researchers adopted the broadest definition of the lipstick effect to include all beauty products, as opposed to focusing exclusively on lipstick.

Beauty products were defined as cosmetic products that enhance a woman’s physical appearance, including lipstick. And through a series of four experiments, the findings were consistent.

“Recession cues persistently increased women’s desire to purchase beauty products,” they wrote, just as it tends to shift their spending away from other products that have no beauty-enhancing qualities, such as furniture, electronics and leisure/hobby products.

The researchers theorized that women purchase beauty products to enhance their attractiveness to men since men place a premium on a woman’s physical appearance in their choice of a romantic partner.

It’s no surprise that women buy beauty products to increase their attractiveness to men, but that women lean into it more in tough economic times might be.

“Because there are fewer men with access to resources in recessionary times [e.g., higher unemployment], women’s desire for resource access in a mate increased in response to recession cues,” they explained.

More beauty from luxury brands

They then tested the hypothesis that under economic stress women indulge in small indulgences for an emotional boost, like lipstick, rather than more expensive luxuries, such as handbags. This was the rationale that Leonard Lauder proposed for the lipstick effect he observed.

The researchers tested this assumption and found it didn’t hold. When given a choice between pricey “attractiveness-enhancement” products and discount versions of the same, women, regardless of their economic status, chose the more expensive options. Specifically, “recession cues did not increase desire for discount brand beauty products.”

Women chose the more expensive brands because these alone were perceived as being more effective to enhance their attractiveness.

“Recession cues increased women’s desire for products that could make them more attractive to mates, despite the significantly greater expense of such products,” they wrote and suggested that was because luxury beauty brands do a better job advertising their attractiveness-enhancing benefits.

And the researchers concluded:

“Economists have established that recessions are reliably associated with increased spending on two types of products: traditional inferior goods (e.g., spending more on tuna rather than salmon because of budgetary constraints) and morale boosters (e.g., going to see a Charlie Chaplin film in the Great Depression).

“Although the lipstick effect has garnered some anecdotal lore, the present research suggests that women’s spending on beauty products may be the third indicator of economic recessions — an indicator that may be rooted in psychology.”

Power in the lipstick tube

NPD’s data adds an interesting postscript to this conclusion. During the pandemic, when everyone was hiding behind their face masks, makeup sales tanked but fragrances experienced unprecedented growth.

“In the absence of being able to put on lipstick, consumers were flocking to fragrances,” NPD’s Jensen said. “And the biggest proportion of fragrance sales during that time were seen in the more expensive luxury and designer brands.”

Because a bottle of perfume costs significantly more than a tube of lipstick, and behind face masks, women’s lips weren’t visible, they turned to fragrance to draw male attention. But now as things are returning to normal, women are once again indulging in the power of lipstick.

April Benson, a clinical psychologist in New York City, believes that among all beauty products, lipstick is the most profound to immediately and dramatically change a woman’s appearance. It is “very primal…It’s part of the uniform of desirability and attractiveness.”

And beauty entrepreneur Poppy King, who’s made a lifelong study of lipstick in her role as the Lipstick Queen, said, “Give a woman the right lipstick and she can conquer the world.”