The lipstick theory came up on a presentation I went to recently. The lipstick effect is the theory that when facing an economic crisis consumers will be more willing to buy less costly luxury goods^, e.g instead of buying expensive fur coats, people will buy expensive lipstick. 

Interestingly enough not to long ago I went shopping for a purse I’ve had my eyes on for a while, but the shopping trip ended up investing in a lipstick and some make up instead.  The lipstick is in a color and a matt finish that I normally never would have picked myself.  I’m now addicted to it and wear it all the time as it get tons of complements and make me smileJ.  I might not need that purse after all…!

From Wikipedia:

The underlying assumption is that consumers will buy luxury goods even if there is a crisis. When consumer trust in the economy is dwindling, consumers will buy goods that have less impact on their available funds. In her book, The Over Spent American, Juliet Shor talks to consumer’s purchase of higher-priced, more pretigious lipsticks, specifically Chanel, that are used in public, vs. lower-priced, less perstigious brands that are used in privacy of the bathroom.

My lipstick?

Oh, it’s Chanel.. (!);

 Rouge Allure Velvet in La Ravissante # 32.