HEMLINE INDEX, LIPSTICK INDEX : SEXIST BUT TRUE INDICATORS OF THE ECONOMY

Ever heard of Hemline index, it tells that there is a correlation between the length of women s' skirt or pant in a country and its economy.What it propounds is the women's skirt hemline moves with the stock market index. The skirt length goes down as the market booms and vice versa. It seems far-fetched and sexist but has been true many times in history since its inception by economist George Taylor in 1926.

This effect is said to happen due to a psychological effect on the public which basically translates into that when economy is grim, people tend to be less rash and risk taking and become more modest. Some of the times hemline index was observed were, during 1920's the US economy was rising phenomenally increasing the hemline and the crashing of wall street in 1929 reduced the hemline to almost zero. Also during 1960 when the market was up micro mini skirts were in trend but due to Arab Oil embargo in 1973, market went down which in turn resulted in long skirts becoming the new trend. There have been many other examples all over the world which supports this theory.

   

Like hemline effect, lipstick indicator is based on the theory that a consumer turns to less expensive indulgences, such as lipstick, when she feels less than confident about the future. Therefore, lipstick sales tend to increase during times of economic uncertainty or a recession. This term was coined by Leonard Lauder, who found that after September 11 terrorist attacts, his lipstick sales doubled. The speculation is that women substitute lipstick for more expensive purchases like dresses and shoes in times of economic distress.

References :

http://www.investopedia.com/terms/l/lipstickindicator.asp

http://www.economist.com/node/12998233

http://womenshistorynetwork.org/blog/?tag=hemline-index

http://www.financemanila.advfn.com/2009/06/13-market-indicators-that-may-dictate-  stock-market-trends/

http://money.howstuffworks.com/lipstick-indicator.html

http://www.businessinsider.com/hemline-index-2012-2?IR=T

http://en.wikipedia.org/wiki/Hemline_index