Month: September 2024

Here’s another fun fact about economics: The “Lipstick Effect” is a phenomenon observed during economic downturns where consumers tend to buy more small luxury items, like expensive lipstick, instead of more costly luxuries like jewellery or vacations. This behaviour is thought to occur because people still want to treat themselves despite financial constraints, and smaller luxury items offer an affordable way to experience a sense of indulgence. This concept illustrates how consumer behaviour can shift in response to economic conditions, providing valuable insights for businesses and marketers. I’m wondering if there are any other examples of this. Keen to read your comments.

#economics #lipstick-effect
Image attribution: freepik

Here’s another fun fact about economics: “Tourism Leakage” is a term that describes the phenomenon where a significant portion of the revenue generated from tourism in a region does not remain in the local economy but instead “leaks” out to foreign investors, international companies, and overseas suppliers. In many Pacific Island countries, tourism is a major source of income, but a large share of the profits can end up abroad, particularly when hotels, airlines, and tour operators are foreign-owned. This reduces the positive economic impact of tourism on the local communities and highlights the importance of developing local tourism businesses to retain more benefits within the region.

#Pacific #tourism-leakage #economics
Image credit: Dennis Tolkach