Graduation Year
2026
Date of Submission
12-2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Angela Vossmeyer
Terms of Use & License Information
Rights Information
© 2025 Richard M Sweeney
Abstract
This paper examines whether consumers shift toward lower-cost beauty products during periods of economic uncertainty and whether this behavior moves with financial market volatility. Using household-level microdata and aggregate monthly expenditure data from the Bureau of Labor Statistics’ Consumer Expenditure Surveys (2004–2023), the study evaluates how cosmetics spending changes relative to jewelry across two major economic crises: the Global Financial Crisis and the COVID-19 pandemic. Across both datasets, cosmetics consistently become a larger share of discretionary spending when economic conditions deteriorate, supporting the presence of a lipstick-effect pattern. At the macro level, cosmetics spending is generally inversely related to market volatility, but this relationship becomes positive during the Global Financial Crisis, when consumers sharply substituted away from higher-cost goods. Together, the results demonstrate that the lipstick effect persists across two decades of business cycles and that its relationship to financial volatility is crisis-dependent rather than uniform.
Recommended Citation
Sweeney, Richard M. III, "The Lipstick Effect Across Economic Crises: An Empirical Study of Cosmetics and Luxury Spending from 2004 – 2023" (2026). CMC Senior Theses. 4346.
https://scholarship.claremont.edu/cmc_theses/4346
