The Lipstick Effect: Why Millennials and Gen Z are Addicted to Treating Themselves
Updated: 2 hours ago
Design by Sahana Lynch
Lipstick has stood the test of time, swinging wildly between being deeply beloved and heavily stigmatized across many civilizations. Eventually, this cultural staple birthed its own economic concept: the “Lipstick Effect.” It is an economic theory suggesting that during times of economic hardship such as recessions, high inflation, or living-cost crises, consumers cut back on major discretionary purchases (like cars, holidays, or expensive luxury goods) but continue to spend money on smaller, affordable luxuries like cosmetics, fragrance, or skincare. Far from just being a modern vanity, lipstick boasts an impressive history spanning spiritual rituals, societal censorship, wartime patriotism, and modern consumer economics.
To understand red lipstick and the power it holds in the modern era, we have to trace it back to its origins. We will have to go back to 17,000BC. Human interaction with paint-like pigments dates back to prehistoric times, when early humans decorated cave walls before painting themselves. Around 3000 BCE Ancient Egyptians utilized black, yellow, and red ochre pigments not just for free will but also for ritualistic purposes to ward off evil spirits. Ancient Egyptians utilized natural resources like red berries, carmine beetles, beeswax, animal fats, plant oils, and fish scales to create their lipsticks smooth, spreadable, and vibrant. A video exploring the history of lipstick provides further context. Across various global cultures, body paint was believed to confer mystical powers or favor with the gods, utilizing natural ingredients like crushed carmine beetles, ants, and red fruits.
Throughout history, wearing lipstick frequently fell in and out of style. The anti-makeup hostility came from Puritans, strict Calvinist Protestants, and The Catholic church. All believed that altering one's physical appearance with paint or dyes was an insult to God, implying that His creation was imperfect. However, the immense influence of British and French royalty eventually brought it back. As Phoenix Chemical notes, “Lipstick wasn’t very common in Europe until Elizabeth I popularized the look for nobility... created from beeswax and red dyes created from plants.” Though it waned in popularity after her era, a new formulation emerged in the late 1800s using beeswax, castor oil, and deer tallow. While lip rouge was sold publicly in storefronts by this time, its use largely remained a private affair—until the monumental cultural shifts of the 20th century. As America faced turbulent economic landscapes starting with World War I, lipstick sales rose and maintained stability. It was valued as a small, affordable luxury that could lift one’s spirits when major purchases were out of reach. This era also provided a massive opening for a previously neglected commercial field. Two fierce rivals with vastly different backgrounds stepped up to fill the niche, building towering cosmetic empires in the U.S. and Europe: Elizabeth Arden and Helena Rubinstein.
When World War II forced millions of American women into heavy, male-dominated industrial workplaces, a unique cultural anxiety emerged. Society and the government worried that industrial labor would cause women to lose their femininity. The solution? Massive patriotic marketing campaigns. American companies would advertise lipstick to working women. Lipsticks and limited accessories “was seen as a symbol of patriotism during the time, not only did it make women feel more feminine, it made them feel like they were defying the difficult times that were happening around them.” Red lipstick was heavily promoted as a suitable shade for any occasion at home, in the workplace, and even on active duty. In 1941, famous makeup artist and women’s activist Elizabeth Arden created “Montezuma Red” to perfectly match the red piping and chevrons on women’s marine uniforms. Shortly after, she introduced “Victory Red.” For America, red lips symbolized victory, optimism, and unyielding morale against the fascist regime. Wartime propaganda epitomized by the iconic image of Rosie the Riveter deliberately depicted women with immaculate red lips to project an atmosphere of normalcy, abundance, and unwavering national strength, effectively countering psychological warfare and enemy morale campaigns.
With major purchases like cars and houses halted due to wartime shortages, a tube of red lipstick became an accessible way for a working woman to spend her disposable income. Propaganda posters explicitly depicted iconic figures like Rosie the Riveter wearing bright red lipstick while operating heavy machinery. By the end of World War II in 1945, red lipstick was no longer viewed as a fleeting vanity, it had officially become a core component of the modern woman’s everyday identity. This wartime resilience laid the groundwork for a broader economic theory. The lipstick effect contends that consumers will be more willing to buy less costly luxury goods when they are facing an economic crisis.
Instead of buying expensive items like designer purses or fur coats, people pivot to high-end cosmetics, such as luxury brands of lipstick. The underlying assumption is that a certain portion of consumers still desire a psychological lift from luxury goods even during a bad economy. When consumer trust dwindles, individuals buy goods that have less impact on their available funds. Outside the cosmetics market, consumers might be tempted to purchase alternative small treats, such as gourmet coffees, artisanal breads, craft beers, or smaller electronic gadgets. The concept was popularized in 2008 when Estée Lauder chairman Leonard Lauder noted that his company's sales of lipstick rose following the September 11 terrorist attacks in 2001.
The Lipstick Index was subsequently derived as an indicator to describe increased sales of cosmetics during economic downturns. However, modern economic analysis has sparked debate over the theory. Subsequent recessions including the late-2000s financial crisis, provided data controverting Lauder’s absolute claims, showing that cosmetic sales can sometimes drop alongside reduced overall economic activity. Financial analysts from the past thirty years note that while the index may not serve as a foolproof macroeconomic predictor, the core psychological trend remains very real: when major life milestones like buying a home or a car feel completely out of reach, a small, accessible luxury item acts as a tangible form of comfort, self-care, and everyday resilience.
Tiff is a writer at The Paper. She is currently in her junior year at CCNY studying English with a concentration in creative writing. She has been with The Paper for a few months and she has many ideas for future articles. Her favorite color is ruby red. In her free, time Tiff enjoys creating cosmetics-related content on her Instagram and she takes any opportunity to read in any quiet park.
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