The ever returning story on the relation between economic circumstances and skirt length

Rumour has it that the first person to mention a correlation between skirt length and economic circumstances, was economist George Taylor. This was as early as 1926, and his ‘theory’ was called the hemline index. In order to test whether there is some validity to this theory, Franses and his then-student Marjolein Baardwijk performed a research using empirical tests. They gathered data on the length of skirts since 1921 and started analysing the dataset. In order to find any possible correlations, the data was compared with economic cyclical data from the National Bureau of Economic Research (NBER). There appeared to be a correlation between the two factors: when the economy is declining, measured by GDP or stock prices, women’s dresses tend to lower. In this case, economic circumstances lead the hemline. There is a considerable amount of lag: the hemline is three years behind on the economic situation. Hence, when the financial crisis of 2008 arose, skirt length did not immediately increase: it took some time. So, economic decline causes the hemline to decrease. This fortunately doesn’t work vice versa!

Usability

A lag of three years makes skirt length a useless indicator. However, there are other indicators that are very useful to determine the economic situation, some of which only have a lag of about 1.5 months. According to Franses, very strong parameters are the amount of minivans sold and the amount of temporary employees employed. These indicators are positively correlated with economic growth: when the economy is booming, lots of minivans are sold for business means. The same thing holds for temporary employees. In times of economic decline, temporary employees are the first ones to be dismissed.