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Blog Feature

By: Simon Danaher

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November 20th, 2015

Glamour girls, pants and Big Macs…

Investment

[Estimated time to read: 3.5 minutes]

How are these economic indicators?

Playboy playmates, pants and Bic MacsYou probably have your own “finger in the air” technique for measuring the economic vibrancy of a place.

My barometer is city traffic.

Morning city traffic jams, I believe, indicate high economic activity. I remember traveling to Dubai in early 2010 as the city continued to recover after the “Dubai World” crisis – you could almost walk across Sheikh Zayed Road!

Now, it’s practically bursting at the seams.

Over the years people have dreamt up many alternative means of measuring economic activity and here we look at a few. Although, if I’m honest, I suspect a few of these were simply an excuse for men to sit perusing certain pictures for hours. But what do I know?

The Hemline Index

In 1926 economist George Taylor presented his theory that the hemline on women’s dresses rise and fall in line with stock prices.

There does appear to be some truth in it. In the boom times of the 1960s we saw the advent of the miniskirt and in 1929, hemlines apparently “dropped overnight”. According to Wikipedia, non-peer-reviewed research in 2010 confirmed the correlation, although it noted that there was a time lag, with the economic cycle leading the hemline by about three years.

I wonder if changes in fashion, particularly the introduction of so-called “fast fashion”, has unthreaded this particular theory though?

Playboy Playmate Index

A clearly very busy psychology professor at Coastal Carolina University studied Playboy Playmates of the Year from 1960 to 2000 and found that, when the economy is uncertain, “older, heavier Playmates with larger waist-to-hip ratios and smaller bust-to-waist ratios dominated”.

To be fair to Professor Pettijohn, the research was part of a wider series of studies which found that when the economy is uncertain, people tend to prefer more mature traits in others.

I’m sure some of you will want to take a closer look at this one, but it will all have to be retrospectively now, given Playboy’s recent decision to stop publishing nude photos.

The Big Mac Index

An all-round more savoury one this – the Big Mac index is compiled by The Economist and is arguably the most famous of all alternative economic indicators.

The Economist explains: “The Big Mac index was invented in 1986 as a light-hearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity, the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries.

“For example, the average price of a Big Mac in America in July 2015 was $4.79; in China it was only $2.74 at market exchange rates. So the "raw" Big Mac index says that the yuan was undervalued by 43% at that time.”
 
The magazine adds: “Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible.”

Lovin’ it.

The Men’s Underwear Index

Pants. Never the first thing on the shopping list for men – until the economy’s doing well that is, or so the theory goes.

This index is based on the idea that good economic data and the spend of men on their undergarments are entwined.

It does also of course mean that, while there may be some bright white Calvin Kleins cradling the family jewels during the good times, when things are bad… actually, let’s not.

The High Heel Index

The footsie..? In 2011, Dr Trevor Davis, a consumer products futurist at IBM Global Business Services, conducted a study which found women’s heels travel in the opposite direction to hemlines – going up during recession.

According to Davis: “Usually, in an economic downturn, heels go up and stay up — as consumers turn to more flamboyant fashions as a means of fantasy and escape.”

It appears that over the past century, heels usually inched higher during recessions such the Great Depression and the 1970s oil crisis. Conversely, Davis noted that the low, thick heels of the 1990s were replaced by “Sex and the City” stilettos in the wake of the burst dot-com bubble in 2000.

One can’t help wondering if the high heel index puts the boot into the hemline index.

Pants, Playboy and heels can be quite a distraction from what you really need to know about money though. Find out what you should be keeping an eye on by downloading our guide to becoming an expat millionaire below.

And let us know what other indices you’ve heard of and what tells you if times are good using the comment box below.

Image credit: Mert & Marcus for the 60th anniversary issue of Playboy

About Simon Danaher

Simon Danaher previously worked for AES International, in marketing and communications.