Luxury Goods during a economic decline...

With economy not doing so well people still find a need to buy luxury goods!

Economics have many categories for “goods”. “Luxury Goods” are items that people buy more of, as their incomes tend to rise, as opposed to “Necessity goods” like food and shelter, whose demand is unrelated to income. Examples of luxury goods include fine jewelry, expensive sports cars and designer clothing. The Lipstick Effect is the theory that during an economic decline, people buy less costly luxury goods. Instead of buying fur coats, people will buy expensive lipstick. The idea is that people buy luxury goods even during economic hardships; they will just choose goods that have less an impact on their funds. Other less expensive luxury goods besides cosmetics include expensive beer and small gadgets. People don’t seem to care that they are spending there money on useless things, when they should really be saving there money incase something was to happen. Would you be spending your money on “luxury” items if the economy was declining? Why do you think people tend to think this way, that’s its okay to waste money on lipstick instead of bills?

An interesting fact that was attached to this article was that after the 9/11 terrorist attacks on America, lipstick sales DOUBLED.