1 .

2 . As Christmas approached, the price of turkey went wild. It didn’t rocket, as some might suggest. Nor did it crash. It just started waving. We live in the age of the variable prices. In the eyes of sellers, the right price—the one that will draw the most profit from consumers’ wallets—has become the focus of huge experiments. These sorts of price experiments have become a routine part of finding that right price.

It may come as a surprise that, in buying a pie, you might be participating in a carefully designed social-science experiment. But this is what online comparison shopping has brought. Simply put, the convenience to know the price of anything, anytime, anywhere, has given us, the consumers, so much power that sellers—in a desperate effort to regain the upper hand, or at least avoid extinction—are now staring back through the screen. They are trying to “comparison shopping” us.

They have enough means to do so: the huge data tracks you leave behind whenever you place something in your online shopping cart with top data scientists capable of turning the information into useful price strategies, and what one tech economist calls “the ability to experiment on a scale that’s unimaginable in the history of economics.”

In result, not coincidentally, normal pricing practices—an advertised discount off the “list price,” two for the price of one, or simply “everyday low prices” are giving way to far more crazy strategies.

“In the Internet era, I don’t think anyone could have predicted how complicated these strategies have become,” says Robert Dolan, a professor at Harvard. The price of a can of soda in a vending machine can now vary with the temperature outside. The price of the headphones may depend on how budget-conscious your web history shows you to be. The price may even be affected by the price of the mobile phone you use for item search. For shoppers, that means price—not the one offered to you right now, but the one offered to you 20 minutes from now, or the one offered to me, or to your neighbor—may become an increasingly unknowable thing. “There used to be one price for something,” Dolan notes. Now the true price of pumpkin-pie spice is subject to a level of uncertainty.

The Lipstick Effect

In 2020, the world was plunged into an economic downturn as the COVID-19 pandemic caused widespread closures to businesses. Under these circumstances, millions of people     1     found themselves facing financial insecurity. During such times of economic hardship, one may naturally expect that consumer markets will see a decline in expenditure, as people everywhere feel     2     to making only “essential” purchases. However, a curious phenomenon known as the “lipstick effect” can often be observed.

The lipstick effect refers to the phenomenon of consumers spending on small luxury goods even when an economic depression occurs. This phenomenon was     3     the “lipstick effect” in 2001 by Leonard Lauder, chairman of luxury cosmetic company Estée Lauder. He had not only witnessed the phenomenon at work but also realized that it was especially     4     in the case of lipstick and other cosmetic products.

So, how exactly do consumers who are short of cash     5     making such purchases? First and perhaps most     6    , consumers may simply wish to give themselves treats now and again to provide distractions from their financial insecurity. Another     7     has to do with labour markets. Specifically, during the economic depression, job seeking tends to become more competitive. Thus, people     8     employment may perceive a need to spend money on certain products to improve their physical appearance. By using products such as lipstick, they may feel more confident during job interviews.

Whatever the causes of the lipstick effect, this phenomenon is no short-lived     9    . During the global depression of 2007-2009, sales of cosmetic in the United States increased by around 5%. Based on such data, it seems that even in the current insecure economic     10    , the luxury cosmetics industry is one that will be sticking around.

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