Sunday, November 8, 2009

The Economics Behind Size 0 - Women Waistline, an indicator of economic growth

With the economy and markets taking a breather before their next move, I thought it’s time to talk about something that is a little lighter and shows that economics play a role in every small and big social aspect of our lives.

‘Size 0’ a phenomena that started from the ramps of London and Paris has caught the fancy of some circles here in India too. Technically ‘Size 0’ is a figure of 30-22.5-32 inches. I am yet to meet a person who says that Size 0 is a figure he likes. So the question that arises is why is size 0 such a rage in the fashion world and among many women. This is where the foundations of economic development kicks in. 

In economics we generally study state of equilibrium, however realty is that the state of equilibrium is just a mirage. The forces on either sides of the curve swing between extremes for a very long time till there is maturity in the markets and that's when you get the equilibrium state. The era after the World War brought about a prolonged period of economic boom. The lifestyle of the society started to change dramatically and this included the eating habits... with more processed foods to excite the taste buds now available the society went berserk after them. This is the vary first stage in economic development of a product wherein that product experiences dramatic growth rates almost to the point of maniac rage. Some stocks in markets become speculators puppies and market darlings at the start. This stage is what we call irrational exuberance. So we observe that since the onset of 1950s fat bellies were a fashion statement. Plumpness was not just considered fashion but acceptable. 

The reason: Simple because the more plump you were would imply that you had the resources to enjoy the expensive food and luxurious lifestyle of relaxation and enjoyment. This is exactly the stage where we find our society (India) today. Here plumpness is considered acceptable because that implies that you have the resources to enjoy life. Money to have good food, servants at home and cars to drive.

Since the onset of 21st century things started to change in West. 'Size 0' started to come in fashion, the twin forces on the economic axis started to shift from one extreme to another, irrational exuberance  resurfaced but on the different side of the spectrum. So the question how did it all changed and why did it all started.

The reason: As the economy grew and people became richer the most common need of almost all people was satisfied, which is good food and a good lifestyle. The first economic stage was complete. People with far greater resources needed to become different and so they shifted to altogether a different lifestyle which involved a diet of lettuce leaves/ rucola, fruits, proteins and very limited carbs. Ideally such a diet should not be that expensive, but hey since the rich people are after this diet and they have a higher purchasing power this diet became very expensive and envious to have. Trust me the food bill of my Sunday shopping that involves purchase of fruits, Soya Milk, Tofu and Juice is far greater than all my meals over the week. And yes not to forget the booming gyming and fitness industry that started. This again became a fashion statement and mark of high social strata. Because only rich people can afford it. Average middle class can neither afford it nor would get the time from it's daily chores to go for it. While the rich can take care of their work on cellphone or internet and take time out for gyming, good food and taking care after themselves. Only some stratas of our society (India) are beginning to reach that level and hence it shows that we still have a long way to go in terms of economic growth.

The extreme changing trends in the body structure and eating habits of humans shows that we still have to mature even with respect to the most basic human need "Food". Something as basic as food which is composed of basic nutrients can be an indicator of economic development and social status is indeed quite interesting. What impact is this trend going to have on the food industry right from agri engineering ,production, processing and distribution would be interesting to note and be cognizant about for future investment decisions. Maybe companies like McDonalds may face rough weather in the future while chains like Whole Foods may do very well, maybe the global demand of food products may shift from carb based to more protein and vitamin based food products. All I can say is that we are living in interesting times and for good or bad the current trend is towards Size 0. So the next time you look at women's belly remember that her waistline not just tells how fit and beautiful she is but also how fit , beautiful and rich is the country in which she lives.

Hold this thought, till next time.............