History has witnessed the emergence of multiple unconventional and head-scratching economic indicators which study the condition of the economy. Whether it was the lipstick sales, revenue out of buttered popcorn sales at cinema calls or something as bizarre as the trend of haircuts in a nation, all have been deemed as accurate indices to take an in-depth study of the economy. Something along the same lines has emerged over the recent years and it has been given the name of Men’s Underwear Index (MUI).
Yes, you read it right. The trend line of the sales of men’s underwear within a particular period in an economy can paint a picture of the economy’s condition. If men’s underwear sales are falling, then that indicates that the economy is functioning poorly and help is needed. If, however, the sales are booming, then there’s nothing to really worry about. This concept was birthed by former Fed Chairman Alan Greenspan, who popularized this theory from the 1970s. The underlying assumption according to Greenspan is that underwear is a necessary item for consumers instead of being a luxury for them, and so their demand tends to remain elastic, except in severe economic downturns.
While viewed as being inaccurate by several critics, the index is indeed supported by actual proof of its effective results in several countries. Let’s talk about India first. When the Indian economy was going through a rough phase in the year 2019, part of it was indicated by the MUI. The data on the inner wear sales suggested that the valuation of the inner wear companies in the market had taken a huge hit. In the period of 2018-19, Page and Lux had fallen by a staggering 46 percent. On the other hand, there was a steep decline by 33 percent in the share price of Dollar Industries.
We also have the example of North America here to further support the accuracy of the MUI. The men’s inner wear sales shot up by $1.1 billion since the year 2009, which significantly marked the beginning of an economic recovery in those parts of the world. Perhaps the most convincing example that we must talk about is through the words of local retailers and manufacturers of Bangladesh in cities of Dhaka and Narayanganj.
Complaining about a drop in sales, some local shopkeepers reported that their daily sales of men’s inner wear fell by almost 50 percent. Another salesman shared a similar sentiment of the market. In his own words, “People who tend to buy underwear from within their reach seems to not like us anymore. Ultimately, they escape the purchase.” Other suppliers also reported a significant decline in the demand, with minimal change in the Chinese imported ones, while some said that regardless of the origin, the sales have been plunging.
Another striking example is that of Liaoning Province of northeast China. Sales of men’s inner wear rose by 42 percent in the year 2017 and 32 percent in the subsequent year. At the same time, the economic health of this province was fairing quite well, with a striking 4.2 percent growth and 5.6 percent growth in 2017 and 2018 respectively. It was reported by key stakeholders that the growth was definitely tied back to the Men’s Underwear Index, among other indices.
This trend was indeed indicative of the overall health of the Bangladeshi economy in the period of 2019-20. The economy had slowed down, with a slump in many factors at the macro level- employment, growth and per-person income. The President of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) had attributed the economic slowdown to the restructuring process.
The Men’s Underwear Index, thus indeed has been proven to accurately reflect the state of the economy. However, just like any other economic theory, it has not ran past the scrutinizing eye of the critics. They argue that the very assumption on which the concept is built on is faulty. The trend that in a lot of cases, women and not men buy their inner wear for them and thus, the index fails to take into account a very major factor. Another noteworthy point put across by critics is the behavioral or attitudinal tendency of men when it comes to their underwear. The habit of not purchasing a new underwear unless it’s threadbare poses a huge problem and essentially can disprove the whole theory.
Therefore, caution must be exercised while making use of this index to study the economic emotion of a particular nation as further study and research are still required to determine its accuracy to the fullest extent. There are many contradictions and other underlying issues with the assumptions which need to be looked into before establishing the usability of this index. However, it has provided with a newer perspective into economics and should be welcomed with open hands.