Wenying Li

Who they are

Wenying Li led the 2020 paper 'Modelling with flexibility through the business cycle: using a panel smooth transition model to test for the lipstick effect' with Chen Zhen and Jeffrey H. Dorfman. The published record consulted here is the abstract and the journal citation, so this page covers what the paper reports and says nothing about the author's career, institution or other publications, none of which has been verified.

Key papers

Li, W., Zhen, C., & Dorfman, J. H. (2020). Modelling with flexibility through the business cycle: using a panel smooth transition model to test for the lipstick effect. Applied Economics, 52(25), 2694-2704. Online November 2019.

The authors examine whether lipstick sales rise during downturns, a pattern they note had not been empirically confirmed. They use American weekly retail scanner data from 2006 to 2016 and a panel smooth transition regression demand model, which lets demand coefficients shift smoothly and non-linearly with macroeconomic conditions.

Key ideas

The income elasticity of lipstick demand fell from 0.31 to 0.05 during the 2007 to 2009 recession, then recovered gradually to 0.31 by the second quarter of 2014. In plain terms, lipstick demand became far less sensitive to income during the recession.

The authors present this as the first empirical confirmation of the lipstick effect. It concerns one product, in scanner data, over one business cycle.

---