Lipstick, mascara, and the economy have a threesome

Have you heard of the lipstick index?

For those of you unfamiliar with the economic theory of Leonard Lauder, the former CEO of make-up giant Estee Lauder, here's the gist: when the economy goes sour, as it did after 9/11, lipstick sales go up. The reason? Even in tough economic times, women want to splurge and treat themselves. But they're broke, so they forgo the $200 jeans and $800 handbags, instead dropping cash on cheaper designer loot, like $20 lipsticks.

Lauder's index isn't HBS-level theory. But it kind of makes sense, especially in America, where many women (especially young, single and urban ones, like myself) have the unfortunate tendency to rack up major credit card debt on uber-luxurious and way too expensive duds. But when 401Ks disappear and employers start firing workers, even the spendthrift youth of America start to button up and watch their wallets. (Louis Vuitton wallets, natch!) Confronted by a desire for a luxury but the bank accounts of a priest, they make sacrifices: "If I can't buy the Chanel purse, then I'll just buy the Chanel lipstick." Essentially, brand name lipsticks replace brand name clutches.

His theory hasn't been holding up lately. Even though we're in the midst of the worst recession since 1929, lipstick sales are plummeting. In fact, the entire make-up industry is facing some serious financial hardships; by mid-2009, L'Oreal, the go-to drugstore cosmetics line, will lay off 500 US employees. Ouch. But there is a silver lining: mascara. Mascara sales have been up for the last few months. Why? Many analysts are crediting new mascaras with vibrating bristles for the increase. Um, weird, but I digress. Here is an article about it: http://tiny.cc/yLGcS. Is a Mascara Index on its way?

A couple months ago, I resisted dropping dough on a fab BCBG dress....but I did buy my fave Dior mascara. Now that the economy is in the dumps, what substitutions are you making? What's your lipstick index item?

DISCLOSURE (meant mostly for the 'rents and grandparents): Yours truly is a huge cheapskate who doesn't spend carelessly. She also pays off her entire credit card bill every month and has no debt....except for that damn car.