Some say, when the economy is doing well, hemlines increase, which means we see more women wearing miniskirts. Moreover, when the economic situation is bad, the hemlines drop, and the length of the skirt increases. But is that true? RTL Z likes to find out and asks econometrician Prof. Philip Hans Franses of Erasmus School of Economics.
Together with Marjolein van Baardwijk, Philip Hans Franses put this to test in 2009, using data for almost 90 years. He collected 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). Franses and Van Baardwijk found that the economic cycle leads the hemline with about three years.
Than how is it possible that a longer hemline is fashionable nowadays, while our economy was doing great three years ago? Franses admits we shouldn't take the theory to literally, but with a grain of salt. For economic forecasts we can therefore better rely on indicators such as the inverse yield curve or the purchasing managers index.