What does the Lipstick effect mean?

Have you ever heard of “the Lipstick effect”? No, it’s not the latest trend on TikTok, but it’s an interesting quirk in our spending habits, especially when the economy throws us a curve.

So here’s the bottom line: when money is tight and the economy is looking a bit bleak, we might not go for big, expensive things like that shiny new car or the latest iPhone.

But a fancy lipstick or a little luxury? Absolutely yes! It’s like comfort food but for our wallets.

Why are we doing this?

Think about it. When times are uncertain, we are less inclined to make those big, expensive purchases. Too much commitment perhaps? But we still want those little pick-me-ups like the premium lipstick or that slightly overpriced coffee. It gives us a little luxury and a sense of ‘treating ourselves’ without breaking the bank.

People still crave a taste of luxury, even in tougher times, means there is always a market for these smaller treats. So next time the newspaper headlines scream “economic downturn”, and you find yourself looking at that fancy lipstick or gourmet chocolate cake, just remember: it’s not just you.

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