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Analyzing the Effect of COVID-19 on Household Consumption of Small Luxury Goods in Qingyuan City, China Using the Lipstick Effect

作者:Huang Jiaqi; Jan Lorenzo G. Alegado

院校:Qingyuan Yawanglian Technology Co., LTD; Department of Economics, University of San Carlos

摘要:The COVID-19 pandemic has altered people’s lifestyles and spending habits in unexpected ways globally. Similarly, consumer shopping habits in China have shifted as a result of the pandemic. China is turning into one of the most important luxury goods markets. The rapidly expanding demand for luxury goods in China is helping entertainment and cosmetic industry. While interest in the luxury sector in China is growing, there has been little research on the impact of COVID-19 on household consumption of small luxury goods using the “lipstick effect” . It has been suggested that the “lipstick effect” can explain the observed changes in household goods consumption patterns before and during a pandemic. The lipstick effect suggests that as customers’ earnings decline, they would forgo large-ticket luxury goods purchases that they can no longer afford in favor of lesser luxury things. The goal of this study was to determine whether the lipstick effect occurred in selected household consumption areas in the Qingyuan City area of Guangdong Province, China, as a result of the COVID-19 pandemic. This study adopted a quantitative research design. Relevant data were collected from a sample size of 384 households using a household survey questionnaire. The results found that evidence of lipstick effect in household consumption of entertainment and cosmetic goods during the pandemic. The two goods were inferior and income elasticities of expenditure shares became less inelastic during the COVID-19 pandemic. The lipstick effect can be used to predict or monitor economic downturns as these goods exhibiting lipstick effect are resilient during downturns. In turn, these industries are sources of growth during downturns or health crisis.

关键词

COVID-19; Small Luxury Goods; Lipstick Effect; Engel Curve

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参考

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