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Lipstick and the Narrative Fallacy

December 01, 2008

One of my favorite recent books is Nassim Taleb’s Black Swan. While reading the book last year, I was struck by a point that Nassim made regarding the narrative fallacy, or our inclination as analysts to only look at data through the lens of our chosen hypothesis (highlighting data that makes our point and ignoring data that might be in opposition to our argument).

Just recently I decided to take a look at the “Lipstick Theory,” the idea that in tough economic times purchases of affordable luxuries like lipstick can increase, a theory espoused by Leonard Lauder the charman of Estee Lauder Companies.

Of course a quick chart of “lipstick” searches was in order. To my surprise, there was a massive spike that coincided perfectly with the Wall Street debacle. Unfortunately my joy at confirming the Lauder theory was short lived, a quick check of where searchers were going after searching on “lipstick” revealed that they weren’t proceeding to online retailers but rather the political category. The most popular variation of lipstick searches during the spike “Lipstick on a pitbull”.

narrative fallacy.png

Posted by Bill Tancer at 02:26 PM | (2) | (0)
In Categories Economy

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Comments

Great post. But it stops short of exploring the question all the way. Why did 'lipstick on a pitbull' become such a popular search term? In fact it was related to the political campaign and Sarah Palin.

One could take your point further and explore the issue of the economy and how it influenced this election.

So in the end there may be a link between the economy and lipstick, however not as simple as the affordability of luxury.

Posted by jk | December 1, 2008 07:34 PM

I like the recent WSJ article in which they explored the surge of hosiery this Fall/Winter season and coined it the Hosiery Index... check out the piece http://blogs.wsj.com/runway/?s=hosiery+index&x=7&y=7

Posted by DluvIA | December 10, 2008 10:23 AM

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