In periods of economic contraction, consumer behavior doesn’t vanish—it mutates. While governments issue vague statements about “soft landings” and inflation “moderating,” regular people adjust in real time. Luxury becomes micro, indulgence becomes discreet, and somewhere in this recalibrated ecosystem, a goblin-faced figurine called Labubu quietly becomes the mascot of the moment.
Labubu, a product of Chinese toymaker Pop Mart, is a collectible creature sold in blind boxes that can resell for up to $300. It’s not rare, it’s not functional, and it’s definitely not cheap in the strictest sense. But in an age where joy feels rationed, Labubu has gone viral, with celebrities like Rihanna, Lisa from Blackpink, and Kim Kardashian all spotted toting the figurines. Drops sell out within hours, resellers scoop up boxes in bulk, and just the other day, shoppers queued for more than two hours at the Mall of the Emirates in Dubai just to get their hands on the coveted toy.
This behavioral pattern of recession-era indulgence—small luxuries substituted for big ones—has a name in economic psychology: the lipstick effect. First popularized in the early 2000s by Leonard Lauder, then chairman of Estée Lauder, the term emerged as the beauty giant noticed a curious spike in lipstick sales following the 9/11 attacks and during periods of economic uncertainty. While broader retail sectors contracted and consumer confidence fell, makeup—specifically lipstick—was still flying off the shelves. Lauder publicly remarked on the counterintuitive trend, suggesting that when times are hard, consumers don’t stop spending, they simply recalibrate: foregoing Chanel bags and luxury vacations in favor of a high-quality lipstick that feels indulgent but not excessive, empowering but still within reach.
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The concept, though rooted in anecdotal corporate observation, was later supported by academic studies in behavioral economics and consumer psychology. Research published in the Journal of Personality and Social Psychology by Sarah Hill and colleagues at Texas Christian University found that women in particular are more inclined to spend on beauty-enhancing products during economic downturns—not in spite of financial instability, but because of it. These purchases are not irrational splurges but strategic adaptations. The researchers argued that such spending patterns could be evolutionary, linked to social competition and resource signaling: in leaner times, visible markers of vitality and desirability—like makeup—carry more weight as people vie for opportunities, relationships, and perceived stability.
What makes the lipstick effect so compelling is that it cuts through the myth of the rational consumer. Traditional economic models often assume that individuals, when confronted with financial stress, simply tighten their belts and reduce discretionary spending in a uniform, predictable way. But in reality, humans are not spreadsheets. We are emotional, aspirational, and status-aware. In a world where wages stagnate, rents climb, and retirement feels like a fantasy, buying a luxury lipstick or a Labubu becomes a way to assert some agency. It’s a small act of control and pleasure in a climate that otherwise offers very little of either.
The lipstick effect also reflects how consumption has become entangled with identity and self-worth. In his work Luxury Fever, economist Robert Frank explores how consumer choices are increasingly shaped not by utility, but by positional goods—products whose value is tied to their ability to signal status, taste, or resilience. A lipstick, while inexpensive compared to, say, a Birkin or a Cartier bracelet, can still serve as a potent symbol of refinement, composure, and survival. Similarly, a Labubu figurine—quirky, limited-edition, and culturally fluent—allows the buyer to project a curated form of taste and belonging without crossing the threshold into what might be considered fiscal irresponsibility. And in this context, Labubu’s success is not an outlier, it’s the logical outcome of a consumer psyche that has been shaped, squeezed, and sculpted by years of economic precarity.
But Labubu isn’t the only canary in the coal mine. Culture is full of quiet recession indicators. You just have to know where to look.
Take fashion. Look around and you’ll notice something peculiar: workwear has been co-opted into everyday style. Items once reserved for uniformed professions—Dickies, Carhartt jackets, steel-toe boots—are now staples on runways and street style roundups. This isn’t just an aesthetic trend but an economic reality. When people can’t afford separate wardrobes for the office, gym, and weekend, they buy hybrid clothing that can stretch across contexts.
There’s also the hemline index, a curious theory popularized in the 1920s by economist George Taylor, which posits that skirt lengths tend to correlate with economic conditions. In boom times, hemlines rise—miniskirts abound. In recessions, they fall. While it’s hardly a rigorous metric, the return of long skirts, modest silhouettes, and oversized tailoring in recent fashion seasons echoes this shift.
Even food—the most basic of essentials—has become an object of aestheticization and status signaling. We’ve entered an era where groceries are props in high fashion campaigns. Amina Muaddi staged a photoshoot with Nara Smith casually doing leg lifts with a bag of vegetables. Zendaya posed with a punching bag filled with cereal in a recent ON campaign. And in editorials across prestigious magazines, glossy photos of canned tomatoes or neatly stacked oranges now accompany luxury clothes. Why? Because in a cost of living crisis, food, once mundane, is now aspirational.
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All of this points to the same underlying truth: people are adapting to scarcity by aestheticizing it. When people can’t afford abundance, they turn to objects that feel meaningful, compact, and emotionally loaded. That’s where Labubu enters the chat—not as a toy, but as a talisman.
From a behavioral economics standpoint, this is entirely consistent. As Dan Ariely writes in Predictably Irrational, consumers under financial pressure don’t stop making purchases—they make more emotionally driven ones. They seek comfort, routine, surprise. The blind box scratches all of these itches. It offers a hit of dopamine, a sense of personal reward, and a fleeting feeling of control. And the fact that you don’t know which Labubu you’ll get? That’s the whole point. It simulates agency in a world that offers less and less of it.
This is the darker genius of Pop Mart’s business model. It doesn’t just sell toys. It sells economic escapism at scale. And for that, Pop Mart CEO Wang Ning was rewarded with billionaire status overnight. If this all sounds dystopian to you, it’s because it is. A system in which billionaires are minted from collective anxiety is deeply predatory. The fact that millions of financially anxious consumers are propping up luxury IPOs and VC-backed hype machines via blind box figurines is a structural failure.
Of course, none of this is unprecedented. The economic behavior we’re witnessing with Labubu—irrational demand for seemingly trivial goods, driven by perceived scarcity and emotional urgency—is part of a long lineage of speculative bubbles (when the price of something rises far beyond its actual, practical value because people expect it will keep rising). One of the earliest and most infamous examples dates back to the Dutch Republic in the 1630s, during an episode now mythologized as tulip mania. At the height of the craze, certain rare tulip bulbs, such as the Semper Augustus, were reportedly being sold for more than the cost of a modest home. Some records even suggest that bulbs exchanged hands multiple times in a single day, often via paper contracts with no physical delivery—futures trading centuries before Wall Street gave it a name.
The most coveted tulips weren’t valuable because they were useful. They were valuable because they were strange, viral mutations, infected with a mosaic virus that made their petals unpredictable and striking. As Charles Kindleberger explained in Manias, Panics, and Crashes, bubbles form when “plausible narratives” override rational behavior. What matters is not what’s real, but what’s believable. A good story is often more valuable than good fundamentals.
This pattern has repeated itself throughout history. In the 1990s, it was Beanie Babies—stuffed animals sold in limited runs, collected obsessively, and often kept in mint condition under the belief they would one day be valuable. Then came Pokémon cards, which oscillated between playground currency and auction house treasures. More recently, we witnessed the spectacular rise and messy collapse of NFTs—digital assets that promised exclusivity, status, and wealth, but often delivered little more than volatile JPEGs backed by hype and hope.
Each of these cycles follows a familiar formula: scarcity + story + status = speculative frenzy. And Labubu fits neatly into that equation. Its scarcity and desirability is engineered through limited releases and blind box mechanics. Some editions—like the coveted “secret” Labubu, a rare colorway with a 1-in-72 chance of appearing—resell for over $500 on secondary markets, despite originally retailing for under $15. Labubu may look like a toy, but it behaves like an asset class.
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What makes Labubu distinct from its predecessors is when and why it’s booming. Tulip mania thrived during the Dutch Golden Age, Beanie Babies exploded during late-’90s optimism, and NFTs surged in a pandemic-era liquidity bubble. But Labubu is a recession-era darling; it’s a luxury micro-object for a generation priced out of actual luxuries.
As philosopher Byung-Chul Han notes in The Burnout Society, modern individuals are no longer disciplined by external forces. Instead, they’re coerced internally by a need to perform, optimize, and consume under their own volition. In this framework, buying a Labubu isn’t a childish indulgence, but a full-on coping mechanism. A small act of self-soothing in a system that’s rigged for extraction. As Capitalist Realism author Mark Fisher observed, the cruelty of late capitalism is that it doesn’t just exploit labor, it colonizes desire.
So when you see Labubu grinning from someone’s handbag, or appearing in a TikTok haul, remember: you’re not looking at a toy. You’re looking at a recession-era artifact, a totem of economic fragility, digitized dopamine, and consumer displacement. Its popularity is not accidental, but algorithmic. And it reflects a generation trying to navigate scarcity with dignity, humor, and small luxuries that don’t break the bank.
But we’d be remiss not to ask: who benefits from this pattern? Who profits when people replace financial security with serotonin? When groceries become props and toys become therapy, we’ve entered a cycle that’s less about consumption and more about coping. Labubu didn’t cause this, obviously. But it captures it perfectly. It’s recession-core in figurine form: low-stakes, high-emotion, and hauntingly cute. And that’s precisely why it sells.
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