Beyond GDP: What haircuts, lipstick and underwear sales say about the economy
Although these unconventional indicators can reflect economic conditions, they often rely on anecdotal evidence and lack empirical support
As we all know, conventional indicators like GDP, unemployment rates, and inflation are the standard tools used to measure and predict economic health.
But there are some other indicators which tap into everyday behaviours and spending patterns to provide a more relatable and sometimes surprising view of economic conditions.
These unconventional and quirky measures, such as the Men's Underwear Index, Japanese Haircut Index, Lipstick Index, Cardboard Box Index, and Hemline Index, have the ability to reflect consumer sentiment that traditional indicators might overlook.
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However, most of them are not quite compatible with our societal context, so we tried looking into only three of them — haircuts, and sales of underwear and lipsticks.
The Men's Underwear Index
Alan Greenspan, an American economist, was the Federal Reserve's Chairman from 1987 until 2006.
Several significant economic events, such as the 1987 stock market crash, the dot-com bubble, and the initial phases of the housing market bubble, occurred during his tenure.
He believed that the sales of men's underwear could act as a useful indicator of both the purchasing power of the consumers and the state of the economy as a whole.
The theory behind it was quite simple: men's underwear sales are typically stable, as they are a necessity and its sales do not fluctuate significantly with fashion trends.
However, during periods of financial strain, men may choose to extend the life of their existing underwear rather than buy new ones, reflecting a broader tendency to reduce non-essential spending.
Since underwear is a private garment that is rarely seen by others, it is one of the last items people feel compelled to replace.
Thus, a noticeable decline in men's underwear sales might indicate a lack of confidence in the economy, while a rebound in sales could signal the beginning of economic recovery, as consumers feel more comfortable spending on such items again.
We spoke to some sellers to find out how their businesses are doing. And the answer was expected.
Mustafizur Rahman, an elderly seller based around the Pallabi Shopping Complex in Mirpur, Dhaka, said, "Men's underwear sales have become 1/4 of what they used to be six months ago. And it is true for all types of underwears, from local, cheap ones which cost Tk60-100 a piece, to imported good quality underwears worn normally by middle-class and upper middle-class consumers."
When asked why he thinks the sales are down, he replied, "The cost of living has increased a lot. People are trying to cut costs in any way possible. I think maybe the vendors who are selling on the streets are selling more than us, even if it is very little."
The view was shared by Alamin, a seller at the Gulistan Market.
"Now, the cheap low-quality products are selling more. Even then, sales are nearly ⅓ of what they used to be last year. The imported products are not selling much."
We also went to the street hawkers to see how they are faring.
A hawker named Majed who sells men's underwear among other accessories on the footpath opposite Dhaka College said, "Sales are not even half of what it used to be a few months ago."
The hawker beside him agreed, saying, "It's not just underwear. We are not selling anything these days."
The reason was quite eloquently explained by a seller at the Nurjahan Super Market named Parvez Bappi, "See, people have no money in their hands. They can go on with torn underwear for a while, so they are cutting costs. The economy is not doing well, so our customers are struggling. I can't even remember when I last bought a pair of underwear, and I own an underwear shop! That should give you an idea of the market."
The Japanese Haircut Indicator
This indicator suggests that during prosperous times, women are more likely to invest in their grooming, opting for regular salon visits and elaborate hairstyles.
In contrast, during economic downturns, women tend to choose cheaper haircuts and those requiring less maintenance.
This indicator has been observed over two decades in Japan.
Additionally, there is a trend towards maintaining natural hair colours during recessions, as maintaining dyed hair becomes a less justifiable expense.
Now, does the same reasoning work in Bangladesh? Due to the apparent societal difference, norms, and perception of beauty, trying to judge economic condition based on female hairstyle may not be prudent. So, we looked at men's hairstyle patterns.
Last year, a haircut and a shave would cost around Tk150 and now, it's almost double.
Kalipada, my local barber, showed me the correlation between men getting fewer haircuts and the economic downturn while I was getting a shave this morning.
"You yourself is an example," he said, "You used to come here once a month. Now it's once every two months. Almost everyone has been like this for the last two to three months."
"Inflation has hit us as well, so we had to increase our rate. Maybe that is why there are less customers now," he added, "Also, it is an effect of the price hike of necessary commodities. People are trying to save money any way they can, including haircuts."
While this should not be taken as a definitive measure of economic health, it provides a relatable and human perspective on how macroeconomic trends impact daily life. As it was pointed out by Mohammad Shayan Islam, manager of a barber shop in the New Market area.
"Everyone is having a hard time now. Business has been bad since the beginning of this year."
Another barber in Mirpur said, "People are choosing simpler, cheaper haircuts."
The Lipstick Index
Coined by Leonard Lauder, the chairman of Estée Lauder, during the early 2000s recession, the Lipstick Index says that sales of lipstick tend to rise during economic downturns.
While it may sound counterintuitive, the underlying theory is quite fascinating. When consumers face financial uncertainty, they forego larger luxury purchases in favour of smaller, more affordable indulgences.
Lipstick, being a relatively inexpensive item, becomes a popular choice as it offers a sense of luxury and a morale boost without significant financial commitment.
However, what we observed in the market was not quite the same.
Zakia, a sales supervisor in a cosmetic store in Basundhara City Shopping Complex, said, "We are struggling to sell all cosmetic items, including lipsticks. Sales have become half of what it was six months ago. Maybe women are cutting down expenses to adjust to the price hike. Six months ago, imported high-end lipsticks were sold in high numbers. Now, we can not sell those at all."
The same view was shared by cosmetic store owners in Uttara and Dhanmondi's Shimanto Sambhar.
Tasneem, a salesperson in a cosmetic store in Mirpur-10, said, "I think sales are down partly because of online shops. There are some online pages who sell lipsticks at far cheaper prices. Their quality is very poor and the customers get duped often, but they have become quite popular lately."
But Mishkat Mahiuddin, a Dhaka University student, has shared an interesting insight.
"There are some replica lipsticks which are made locally. Women buy these quite often, and they are really good. They are quite cheap too."
We went to New Market in search of these replica products.
Rasel, a cosmetic seller, said, "Lipstick is a luxury item, you know? So, obviously sales are down. But it's also a seasonal thing, as we sold a lot during Eid."
We contacted some online stores who are known for selling lipsticks, but they were unresponsive. So, it was hard to draw any conclusion about lipstick sales.
And here lies the reason why these quirky economic indicators, while intriguing and sometimes surprisingly insightful, are not considered proper academic indicators. They often rely on anecdotal evidence and lack empirical support, so their results are often unreliable.
Also, they can be influenced by numerous factors unrelated to economic conditions, such as cultural trends or marketing campaigns. This makes their predictive power variable and unreliable.
Even then, these indicators capture the human element of economic activity. Sometimes, they can serve as early signals of economic changes before traditional indicators reflect these shifts, offering a preliminary glimpse into potential trends.
They remind us that economic data is not just about numbers and charts but about real people making real decisions based on their financial situations.
