findings show the theory holds true but w/ a lag of about 3 yrs
.“In 1926 an economist called George Taylor introduced a “theory” that is called the hemline index. This theory says that hemlines on women’s dresses fluctuate with the economy, measured by stock prices or gross domestic product. When the economy is flourishing, hemlines increase, meaning one would see more miniskirts, and when the economic situation is deteriorating the hemlines drop, perhaps even to the floor…
…based on the analysis of actual data on the hemline, which goes back to January 1921, we found that the economic cycle leads the hemline with about three years. Supporting the urban legend, we find that poor economic times make the hemlines to decrease, which means that women’s dresses get lower, and that prosperity is correlated with a reduced hemline (more miniskirts). At the same time, and this is new to the available evidence,we find that there is a time lag of around three years. This explains why at present, in an economic downturn, the skirts are short, as this is simply due to the fact that the economy was in a boom about three years ago (2007-2008).”
Source: the hemline and the economy: is there any match? Econometric Institute Report
See also: the hemline index via ritholtz.com
