The Lipstick Index

Coined in 2001 by Leonard Lauder (chairman of Estée Lauder), this index tracks consumer spending on "small luxuries." The theory suggests that during an economic downturn, consumers hold off on buying high-ticket luxury items—like cars or designer jewelry—but still want to treat themselves. As a result, sales of smaller premium goods, like high-end cosmetics or lipsticks, actually surge. It is a brilliant example of how retail psychology shifts during a recession.