Everyone’s Splurging on Lip Balms—Is It the Lipstick Effect?

When the economy seems to be on a downward spiral and money is tight, people tend to find ways to cope. That might involve canceling an upcoming girls' trip to the Amalfi Coast or saving the last few dollars in your paycheck instead of splurging on the Dior Saddle bag you've been eyeing since 2021. But unlike underconsumptioncore and the Buy Nothing movement, which encourages people to make use of the items they already own—namely clothing and accessories—rather than consume more, there’s one economic trend that has a rather different motive. 

First proposed by economist and sociology professor Juliet Schor in her 1998 book, “The Overspent American,” the “lipstick effect” describes the phenomenon where people—mostly women— tend to splurge on small luxury items, namely lipstick during times of economic uncertainty. The actual term “lipstick effect” was later coined by billionaire and Estée Lauder Companies heir Leonard Lauder in 2001 when he noticed a spike in the company’s lipstick sales post 9/11. 

To learn more about the psychological and economic factors that drive consumer behavior during economic crises, we spoke to two financial experts on the lipstick effect, what drives this trend, and some limitations of the theory. Ahead, everything you ever needed to know about the lipstick effect and how it might be impacting you. 

Understanding the Lipstick Effect

“When inflation increases and the economy cools, people tighten their wallets and reduce their spending,” she explains. “But there are some products, often those that don’t cost a lot of money, for which demand actually increases during a recession. One of these product categories is women’s makeup.”

A 2012 study reported that women’s desire for a financially secure relationship partner grows during times of economic turmoil. This heightened desire for a financially successful partner prompts them to spend money on products that can enhance their appearance such as lipstick.

How the Lipstick Effect Plays Out IRL

Curious to know how the lipstick effect has influenced my own social circle, I surveyed my social media followers about any recent beauty purchases they've made while on a budget. Zameena Mejia, 31, shared that she had recently gifted herself press-on nails after getting laid off in June from her job as a communications manager at a non-profit.

Her reasoning? “I can’t afford to splurge on manicures like I used to,” she says. Similarly, Leslie Aguilar, 25, a recent college graduate, had recently bought herself a Dior lip gloss as a “dopamine hit” and reward for hitting her budgeting goal. These responses align with research, which shows that the lipstick effect is caused by “a psychological desire to ‘treat’ oneself in a more frugal way during an economic downturn.”

It's Not Just Beauty Products

Despite the theory’s title, however, the lipstick effect is not exclusive to the beauty industry and makeup products. The lipstick effect is simply an economic indicator economists have studied over time. Really, this theory is an observation of people being more likely to spend on small luxuries or indulgences while being more mindful about spending on bigger ticket items during periods of economic crisis, says Lindsay Bryan-Podvin, a certified financial therapist for mobile payment service Cash App. 

Apart from high-end cosmetics, people might indulge in a box of premium chocolates, a bottle of perfume, jewelry, or specialty foods, for example, say the experts. Romance and fantasy novels have also seen an uptick in sales during periods of economic recession as people search for budget-friendly outlets for escapism.

Psychological and Sociological Factors of the Lipstick Effect

While it’s been noted that the lipstick effect drives consumers to buy smaller luxuries when money is tight, you might be wondering what psychological and sociological factors may explain this urge to splurge. “When resources are scarce, researchers have documented two routes that consumers use to cope psychologically,” says Kirk. One route is working toward reducing scarcity by gaining more money and the other route is working toward securing a sense of control, she adds.

Remember the pandemic craze of people buying fish flip-flops and showing them off on social media? Yeah, that was the lipstick effect, Kirk argues. Regardless of the absurdity of ‘fish flops,’ “it allowed people to gain a sense of control in their lives when they had no control because it was taken away from them due to external forces,” she notes.

“When we’re in an economic downturn, there is a bigger sense of feeling out of control, of not being sure what’s going to happen with one’s job, and all of that extra anxiety can be a lot,” says Bryan-Podvin. “Shopping is a very predictable experience. Whether we’re shopping in person or online, we know what to expect, and that predictability and sense of control can be something that we crave.”

Limitations of the Lipstick Effect Theory

Like most theories that aim to explain human behavior, the lipstick effect isn’t perfect. For one, just because there’s an association between economic growth and makeup purchases, that doesn’t mean that every time lipstick sales increase, it’s a sign of economic decline, says Kirk. “You have to remember cause and effect.”

Moreover, we need to be careful about gendering consumer behaviors as that can lead to preconceived notions and possible discrimination towards one particular gender—which, in this case, is women. While most of the current research on the lipstick effect centers on those who identify as a woman and how they’re impacted by the phenomenon, men and non-binary people can participate in the lipstick effect, too.

“We tend to be a little bit more harsh on how women are or aren’t spending their money, and so it doesn’t surprise me that this was the way this particular phenomenon was coined,” says Bryan-Podvin. “In general, being cognizant of how we’re gendering these different things is important.”

“In economic downturns, people may be spending a little bit more on small luxuries, but they also may be taking more steps to save up money and being more mindful about those other expenses,” Bryan-Podvin notes.

How to Counteract the Urge to Splurge

While there’s no shame in buying yourself a small tube of lipstick to feel a sense of control, you might actually want to set those $30 aside to save up for bigger, more urgent purchases. With that in mind, we asked the experts for some advice on how to avoid making impulse purchases when money is tight. Here’s what they had to say:

Avoid Falling Into a Scarcity Mindset

Even though you may not feel financially abundant right now, imagining yourself in a situation of plenty can actually help alleviate some of that anxiety and reduce stress, says Kirk. Being aware that a scarcity mindset exists can influence how you behave, she adds. “It has even been shown to help reduce unneeded purchasing.”

Budget for Small Luxuries

If you don’t currently have a “Treat Yo’ Self” fund, this is your sign to start one. “My partner and I budget for ‘fun money’ at the beginning of each month, where we allocate money that we each allow to spend without the other’s judgment,” says Bryan-Podvin. “And so if I decide that I want to save it up for a few months and indulge on a spa day, then I’m allowed to do that.”

Not only is this budgeting hack a great way to have a few extra bucks at the end of each month, but it also accounts for small luxuries, so you can buy what you want and when you want it, says Kirk. So when the economy is, in fact, in crisis, you won’t feel bad about snagging that Rhode pocket blush that’s been sitting in your wishlist.

Pinpoint Your Why

This should be the case whenever making a non-essential purchase, but especially during an economic downturn. It’s important to think about your “why” behind a buy. Are you really wanting a new lipstick or is your desire to go shopping fulfilling another need?

“For me, if I’m imagining this scenario, maybe it’s not necessarily about having a sense of control or having a new color on my lips, but really about getting out and being in community,” says Bryan-Podvin. “And if that’s the ‘why’ behind my purchase, how can I find other ways to get out and be with people? How can I still have my needs met without spending money that maybe I don’t want to spend?”

Is It a Recession or Just Your Anxiety Talking?

As Kirk previously mentioned, an uptick in lipstick sales doesn’t necessarily mean the economy is tanking. It’s hard to say whether the recent increase in makeup sales means an economic recession is imminent or if something else is going on. Remember: The lipstick effect isn’t only caused by economic factors, but can be driven by feelings of anxiety or lack of control as a result of other outside agents.

“There’s a lot happening in our world that can cause anxiety,” affirms Kirk. “When we feel anxious about external forces outside of our control, we tend to engage in consumption and purchasing small items, especially, to give us a greater sense of control.”

Bryan-Podvin says that in her therapy practice, worry over a coming recession has been a theme for the past three years. Nevertheless, she cautions against falling into anticipatory anxiety, which is when you feel anxious about something that might happen in the future. “The economy is a cyclical cycle, meaning it will always be changing,” she notes. 

Keep in Mind

While you don’t control the flow of commerce, you can control how you react to the waves of the economy. Ask yourself what you can do to feel safe during a time of economic uncertainty, suggests Bryan-Podvin. “Does it mean saving up a little bit more? Or, giving yourself a bigger treat budget because you might not be saving up for a big vacation in the future?”

What are the things that you can realistically do to start feeling good, now? If, for you, that means getting your hands on a new Gisou tinted lip oil to feel a sense of normalcy, there’s absolutely no shame in that.