Opinion

Hemline economics

MANASI PHADKE | Updated on January 20, 2018

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Trousers today, growth tomorrow?

What is the similarity between George Taylor 1926 and Rabri Devi 2016? Both are connected to the hemline debate! It was Taylor, not Tailor, mind you, an economics professor at Pennsylvania, who in 1926 observed that the hemlines on skirts and the stock prices exhibited a positive correlation. Higher the markets, higher the hemlines. When the hemlines go long, the markets could well go short.

The market crash of 1928 created a slump hitherto unseen and as the GDP of the US went into the Great Depression, women, who could no longer afford silk stockings, chose longer skirts to cover themselves.

It’s a debate that has been around for long. Are the cyclicality in GDP and fashion really interrelated? Economists sniggered, feminists roared, designers shrugged and the debate raged on. As the global economy bettered after WWII, hemlines continued to rise and the mini-skirts as we know them today, made their entry into the fashion world in the 1960s, coinciding neatly with one of the most expansive phases of the globe.

Come 1970s and skirts lengthened to reflect the oil shocks and stagflation. The lost decade of the 1980s is also best remembered for the “maxi” wave with full length skirts, whilst the housing boom in 2005-06 saw hemlines rise madly. Full length “peasant” skirts made a comeback in 2011, only after the economy failed to recover after the great financial crisis, prompting the CNBC to carry a feature titled “Hemlines are plunging, is economy next?”

The “vital statistics” on this one came as late as 2010, when Marjolein van Baardwijk and Philip Hans Franses from the Econometrics Institute, Erasmus School of Economics, decided to “figure” out the truth using data based research. They actually went on to collect monthly data on the hemline from 1921 to 2009 and then contrasted it with the monthly GDP cycle as indicated in the data by the National Bureau of Economic Research (NBER).

The “long and short” of the debate, they conclude, is that hemlines are led by the GDP by around three years globally. Thus, a low growth rate today could prompt longer skirt lengths in 2019.

“That is exactly what our leader was saying!” reacted the spokesperson of the RJD. “And they accused her of being a woman of the 19th century! But this is a truly forward looking leader with terrific economic insights.” The economy is not doing well at all under the NDA Government. The decision of the RSS to shift to full length trousers is an acknowledgement of the state of the economy.

The GDP is plunging today, the trouser length will plunge tomorrow! The RJD has also gone on to say that Rabri Devi may well be on her way to becoming the next finance minister of Bihar and if things go right, will eventually head to Mint Street to become the RBI governor. “It’s really rather easy,” said the spokesperson. “All you have to do is watch the hemline. When hemlines fall, the interest rates have to fall pro-cyclically.”

The RBI reacted sharply by stating that any decisions to slash or increase rates are only taken after rigorously analysing multilateral causalities in economic fundamentals within a general equilibrium framework. When the RJD did not understand, a special statement was issued in the vein of popular economics. “Relationships in hemlines and GDP are fictitious. Any resemblance to correlations, past or present, is purely coincidental.”

The writer is a Pune-based economist

Published on March 20, 2016

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