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Everything You Need to Know About the “Lipstick Effect”

Canceled Netflix subscriptions. Less Doordash orders. Fewer vacations. These are some of the first things to go when personal budgets start to tighten. One might also think that, during an economic recession, beauty products wouldn’t be in high demand either. But in fact, the  opposite is so true that there’s even a name for it: The Lipstick Effect. The trend was first identified in 1998 by economist Juliet Schor, but it was Leonard Lauder who coined it following Estée Lauder’s announcement that its lipstick sales had skyrocketed in 2001, despite economic recession. 

This spending habit, during difficult times, is likely the case because beauty products, such as lipsticks, “make us feel good and happy,” Tufts University associate economics professor, Edward Kutsoati tells Rose Inc. “There are clearly strong emotional ties to the makeup category that stretch beyond physical appearance,” says Natalia Bambiza, director and beauty category analyst at NPD Market Research Group. In comparison to people who use makeup to just enhance their appearance, “64% of consumers ages 13 to 25 say they wear makeup for a confidence boost,” she says. Meanwhile, “30% of all makeup wearers say that makeup brings them joy.”  

To better understand these spending habits, the meaning of the Lipstick Effect and its significance — and why you might feel compelled to give your own makeup kit a few upgrades when the economy takes a nosedive —  we break down everything you need to know. 

“There are clearly strong emotional ties to the makeup category that stretch beyond physical appearance.”

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