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Bill Tancer is the general manager of global research at Hitwise, the world’s leading online competitive intelligence services. Tancer and his team of analysts are widely quoted throughout the industry on the latest Internet trends. He appears as a frequent guest on CNBC, has been quoted in The Wall Street Journal, The New York Times, the Washington Post and USAToday on topics ranging from the state of e-commerce to predicting American Idol winners using search term research. Tancer also writes a weekly column for Time magazine (Time.com) entitled "The Science of Search.".

About Hitwise

Hitwise is the leading online competitive intelligence service. Only Hitwise provides its 1,400 clients around the world with daily insights on how their customers interact with a broad range of competitive websites, and how their competitors use different tactics to attract online customers.

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Lipstick and the Narrative Fallacy

By admin | November 25, 2008

One of my favorite recent books is Nassim Taleb’s Black Swan.  While reading the book last year, I was struck by a point that Nasssim made regarding the narrative fallacy, or our inclination as analysts to only look at data in the light of our chosen hypothesis (highlighting data that makes our point and ignoring data that might be in opposition to our argument).

Just recently I decided to take a look at the “Lipstick Theory,” the idea that in tough economic times purchases of affordable luxuries like lipstick can increase, a theory espoused by Leonard Lauder the charman of Estee Lauder Companies.

Of course a quick chart of “lipstick” searches was in order.  To my surprise, there was a massive spike that coincided perfectly with the Wall Street debacle.  Unfortunately my joy at confirming the Lauder theory was short lived, a quick check of where searchers were going after searching on “lipstick” revealed that they weren’t proceeding to online retailers but rather the political category.  The most popular variation of lipstick searches during the spike “Lipstick on a pitbull”.

Topics: economics |

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