The underwear theory of economic growth

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Economics has proposed some of the very wild theories and research interests. From Pot theory to Male order, there is no shortage of wild research ideas in economics.

But one theory is surely the weirdest of all and that is The Underwear theory of economic growth. It was proposed by Alan Greenspan, it is no joke and it really holds true in every sense.

The Underwear theory

According to former Federal Reserve chairman Alan Greenspan, the sale of male underwear resembles the prevailing economic condition.

Fall in underwear sales indicates a slowdown in the economy, while the growth in underwear sales signals a recovery in economic conditions.

Rationale behind the theory

Unlike other goods, men only buy underwear when they need a new pair of them or have extra cash to spend.

While the economy is slowing down, people cut their expenses, stop shopping extras to keep their finances stable.

Underwear are among the extras.

And when the economy recovers, people see their income increase and thus start shopping extras. And the sale of underwear increases.

Example:

American example – Underwear index of USA

The underwear index was at the lowest point during housing market crash of 2008

Indian example – Sales of Page Industries & Rupa

The sales figure of Page Industries and Rupa Company have declined or hit the plateau from 2019 to 2020. This coincides with the fall in GDP growth rate of India past 2019

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