Japan's Haircut Indicator

Can the length of women's hair signal where the economy is going? The Nikkei, Japan's leading business daily, thinks so
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Forget hemlines on skirts. When it comes to fashion-oriented predictors of economic performance in Japan, it's the length of women's hair that really matters. At least, that's what the Nikkei, Japan's leading business daily, would have its readers believe. In a report last month, the paper conjured up stats to show that Japanese women start wearing their hair short when the economy is worsening and let it grow longer when times are getting better.

Drawing on more than 20 years of hairstyle data recorded by Kao (KCRPY), Japan's biggest consumer products manufacturer, the idea is similar to the long-standing theory that the wearing of shorter skirts is linked to economic prosperity. After all, shorter hemlines were in style in the U.S. during the Roaring Twenties and Swinging Sixties, both periods of rapidly rising prosperity.

Kao takes its data from annual surveys of 1,000 women in their 20s. The surveys of women in Tokyo's Ginza district and Osaka's Umeda district started in 1987, when Japan's economic bubble was in full swing, and divide hair length into four categories: short, medium, semi-long, and long.

The Long and Short of It

Comparing the hair data to Japan's economic well-being, Nikkei writer Kosuke Iwano found that in 1990, 60% of the women surveyed kept their hair long or semi-long. But by 1997, when the economy was flagging, short or medium for the first time accounted for more than half of all haircuts. In 1998, Japan's economy was savaged by major financial bankruptcies, including that of Yamaichi Securities, at the time the country's fourth-biggest broker.

Today, with Japan enjoying its longest postwar stretch of uninterrupted economic growth, over 80% of the women have reverted to either long or semi-long lengths. What's more, the last time shorter hairstyles were ascendant was in 2004, the year when Japan's economy first began shaking off the worst remnants of the "lost decade," the years following the collapse of the 1980s bubble.

What explains the findings? One theory is that women adopted shorter hairstyles because in harder times they have less money to spend on hair care products, such as hairsprays and gels, which women tend to use more heavily for longer hair. Sales of hair products peaked in the mid-1990s at $980 million before falling every year until 2004, bottoming out at $550 million.

Economists Are Skeptical of the Theory

Still, just as critics doubted the hemline economy, the predictive power of hair lengths as economic indicators looks unlikely to take off. One major flaw, notes Loic Bizel, a French-born fashion consultant based in Tokyo, is that short hair can be even more expensive to maintain, especially in Tokyo where younger people are happy to pay hundreds of dollars to achieve the latest styles and colors. "When you have short hair you go every month" for a haircut, says Bizel.

Economists in Tokyo, many of whom regularly complain about the quality of official economic data, are also unimpressed. Richard Jerram, an economist at Macquarie Securities in Tokyo, reckons that for hair length to have reflected the harsh reality of the late 1990s, hairstyles would have needed to have been a lot shorter. "I'm surprised there wasn't a fashion for skinheads in 1998," he says.

Jerram adds that hair isn't the first bizarre indicator of economic activity in Japan. Another is viewing figures for Sazae-san, a long-running animated TV show. Supposedly, according to this theory, if people are watching Sazae-san, then they are not out shopping and the economy is doing poorly.

Still, for all that, Japanese hair does have some predictive qualities. While the latest trends in Japan are not a large influence on U.S. and European hairstyles, fashionistas in Asia regularly take styling cues from Tokyo. "They follow the total look of the Japanese," says Bizel, who shows dozens of visiting overseas designers around Tokyo's hippest districts every year. "It's just not the shoes or the bags or the clothing, they also look at the hairstyle."

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