"Red Lipstick Index" and 8 More Schemes to Help You Understand the Economy

Economics seems like a complicated thing: graphs, percentages, forecasts - your head is spinning! But what if you look at it through the prism of simple and even funny things? It turns out that there are unusual indicators in the world that help you understand what's going on with money, without boring lectures. Today we'll look at the "red lipstick index" and other interesting schemes that will reveal economics from an unexpected side.

In 2001, the "lipstick index" began to be used to determine the economic downturn in the country. It was proposed by Leonard Lauder, the founder and owner of the famous American company Estee Lauder. It works simply. Women, even in the most difficult financial situation, strive to look good and love to pamper themselves with shopping.

When money is not a problem, people buy clothes, jewelry, expensive perfumes, handbags. But if things are not going well, the cost of purchases falls. Ladies refuse expensive things, but not shopping itself. They just buy inexpensive goods to please themselves, for example, red lipstick. Why red? It has been proven that this color improves mood. So, if sales of red lipstick are off the charts, the economy is in trouble.

If lipstick seems too feminine an indicator, here's something more serious: the "Big Mac index." It was invented in The Economist magazine in 1986 as a humorous way to understand how much a country's currency is overvalued or undervalued. The idea is simple: compare the price of a Big Mac in different countries. If it costs $5 in the US, and in Russia, say, the equivalent of $2, then the ruble is most likely undervalued.

This index is not just a joke. It is based on the theory of purchasing power parity: the same goods should ideally cost the same all over the world. Of course, taxes and transportation costs make their own adjustments, but the Big Mac still gives interesting food for thought. And at the same time, a reason to look into fast food and "do research" yourself.

Another economic indicator related to women is the “miniskirt index.” It is one of the oldest, as it has been used since 1926. That was when American economist George Taylor, who taught at the Wharton School of Business, noticed an interesting trend: shorter skirts are in fashion in good times.

When the economy is good, women wear shorter skirts to show off their beautiful, expensive stockings. When the country's purchasing power is falling, they wear long skirts. They help hide cheap and darned stockings. It has been noted that the longest dresses in the 20th century were worn by American women during the Great Depression.

It is no secret that modern society is a consumer society. Modern people buy not only necessary and useful things, but also fashionable and stylish items. Also, many make impulsive purchases or go shopping to cheer themselves up. Of course, the more we buy, the more we throw away. This indicator is taken into account by the "garbage index".

The amount of waste produced in a country is directly related to its GDP. Bloomberg economists Michael McDonough and Carl Riccadonna once noted that the amount of waste transported by rail most accurately reflects the level of economic activity of citizens. Reducing the amount of garbage may please environmentalists, but not economists.

And now about something very close and everyday - about the "coffee cup index". Economists have noticed: when things are going well in the country, more people appear on the streets with coffee to go. Offices are bustling with life, meetings follow one after another, everyone is rushing somewhere with a paper cup in hand. But as soon as the economy slows down, the coffee disappears - people start saving and go out less.

Take a walk around your city and take a closer look. If you see a lot of people drinking cappuccino to go, things are probably going well. And if the cups are missing, it might be time to pay attention. It’s a simple but surprisingly accurate way to gauge the mood of the economy right on the street.

And again a female economic marker, which is again connected with beauty. The "hairstyle index" works the same way as the previous one: during a crisis, hairstyles become longer. It is no secret that short haircuts are more demanding in terms of care, as they require careful styling. They also need to be constantly kept in shape by visiting beauty salons. Of course, all this costs money.

When the economy is in a hole, every jar of styling product is worth its weight in gold, and regular visits to the hairdresser are ruinous. Therefore, it is much easier and more profitable to wear long locks, which are enough to wash with shampoo and comb. Another reason for lengthening hairstyles during periods of financial instability is related to psychology. Women subconsciously try to hide from problems behind a broad male back. To do this, they try to match the characteristics of the weaker sex as much as possible and look feminine.

Experts have noted that during an economic downturn, demand for luxury goods drops significantly. Famous brands make their most expensive bags, jackets and shoes from crocodile skin. During periods of prosperity, it turns out that there are quite a few people who want to buy such expensive exotics. This is taken into account by the so-called "crocodile index".

But everything changes when the economic crisis begins. Even millionaires are less likely to look at luxury items, and demand for crocodile products falls sharply. Boutique owners, manufacturers of items, and owners of crocodile farms suffer from this. Some crocodiles are happy: they live and reproduce peacefully in captivity, without fear of reprisals.

Statistics show that during periods of economic downturn, the number of divorces drops sharply. This is not surprising: hard times are not the best time for drastic changes in life, and people try to stick together. That is why the “happy family index” appeared, taking into account the number of divorces.

Experts believe that this index works differently in different countries. This is primarily due to the established mentality. It is not customary for us to rejoice at other people's successes, but it is normal to come to the aid of people in difficult situations. During a crisis, wives pity their wayward husbands and forgive them more. Husbands, in turn, often refuse mistresses, meetings with whom become expensive.

And during economic downturns, people are more likely to take out loans and mortgages. They can be considered a guarantee of a strong family, because few people want to be left alone with financial obligations when money is tight. This rule applies equally all over the world.

The saddest of all the indices we have listed is the "cyclist mortality index". When people's incomes fall, they often start saving on their means of transportation, the repair, maintenance and refueling of which are not cheap. In recent years, many have preferred to switch from their personal cars to public transport, but to bicycles.

For those who are not used to this means of transportation, it is easiest to adapt in the provinces, where street traffic is minimal. But in a big city, cyclists have a hard time. The number of fatal accidents involving bicycles is directly proportional to the number of newcomers who have chosen to ride a "two-wheeled horse."

All these indices show how unexpected and sometimes even funny economic indicators can be. It seems surprising that the length of a skirt or the popularity of red lipstick can tell about the state of the world economy, but statistics confirm these patterns. What unusual economic indicators have you noticed? Maybe you have personal observations that help predict crises or upturns better than any official data? Share in the comments!