Relationship between Total Expenditure on Cosmetic Procedures in the United States and NASDAQ 100 Index

Background:

The volume of cosmetic procedures and expenditures has increased over the past 15 years. Recent studies have shown that the market for cosmetic procedures follows the standard laws of economics. However, no studies published in the literature have found a direct correlation between US stock market indices and expenditures on cosmetic surgery and minimally invasive procedures.

Methods:

The authors analyzed annual cosmetic procedure statistics from the American Society of Plastic Surgeons for 2005–2020 against economic indices, including major US stock market indices [NASDAQ 100, S&P 500, Dow Jones Industrial Average (DJIA), Russell 2000 indices from the New York Stock Exchange, gross domestic product (GDP)], median income of US citizens, and the US population from the Federal Reserve Bank of St. Louis. Pearson correlation coefficient and multiple regression analysis were used for the statistical analysis.

Results:

Total expenditure on cosmetic surgery and minimally invasive procedures (TECP) has more than doubled since 2005 to 2020. TECP revealed statistically significant correlations with all other indicators. TECP had the greatest correlation with DJIA (r = 0.952, P < 0.001). In the multiple regression analysis, the increase in TECP led to the rise of the NASDAQ 100 index (adjusted R² was 0.790, P < 0.001).

Conclusions:

There was a statistically significant correlation between the TECP in USA and the major indices of the US stock market. In particular, the increase in TECP led to the rise of the NASDAQ 100 index.

Takeaways

Question: Is there a statistical relationship between total expenditure on cosmetic procedures and stock market indices in the USA?

Findings: The expenditure on cosmetic procedures in the USA had a statistically significant correlation with all indicators, including stock market indices. Particularly, the NASDAQ 100 index was dependently influenced by the total expenditure on cosmetic procedures.

Meaning: There was a statistically significant correlation between the total expenditure on cosmetic procedures and major economic indicators. We can predict the movement of the NASDAQ 100 index based on the expenditure on cosmetic procedures.

INTRODUCTION

The volume of cosmetic surgical procedures, minimally invasive cosmetic procedures, and their expenditures have increased over the past 10 years. The total number of cosmetic procedures in the United States increased from 6,748,610 in 2000 to 15,595,955 in 2020. In a previous survey, women were more interested in cosmetic procedures than before, and the figure is even higher among women who underwent surgery or a procedure in 2021 than in 2020.¹

However, cosmetic procedures are a consumer-driven industry and have entered the free market.² Recent work has shown that the market for cosmetic procedures follows the standard laws of economics.³ Therefore, cosmetic procedures may be affected by a variety of macroeconomic changes.⁴

There have been many predictions regarding the short-term impact of the current economic climate on cosmetic surgery. However, predicting the trends in the expenditure on cosmetic procedures is a very challenging task because of the many uncertainties involved and the many variables that influence the market of cosmetic surgery, such as the payer’s sentiments toward a particular procedure and political events.

The value of US stock market capitalization is growing faster than ever.⁵ The stock market boom in the US was impressive by historical standards. However, no studies published in the literature have quantified a direct correlation between US stock market indices and expenditures on cosmetic surgery. Our study was designed to investigate the possible correlation between the total expenditure on cosmetic procedures in the USA over the past 16 years and the corresponding trends of the major US stock market indices.

METHODS

Data

The data on total expenditure on cosmetic surgery and minimally invasive cosmetic procedures (TECP) were obtained from the statistics of the American Society of Plastic Surgeons from 2005 to 2020. Only the data for these years were available on the website.

For the economic indicator, the authors chose GDP, median income of US citizens, and the population of the US as representing overall economic status. GDP was defined as the value of all final goods and services produced in a country in 1 year, composed of consumption, investment, government spending, exports, and imports.⁶ GDP provides information about the size of an economy and reflects economic welfare.⁷ Median income is the median point of income, which divides income distribution into two equal parts. This indicator reflects the availability of capital or financial resources in the overall household.⁸ Population growth is known to be an important factor in economic growth.⁹ The authors obtained data for US GDP, median income of US citizens, and the US population from the Federal Reserve Bank of St. Louis.

The authors selected the NASDAQ 100, S&P 500 index, DJIA, and Russell 2000 index, which represent the US stock market, to analyze the correlation between total expenditure for cosmetic procedures and the stock market.¹⁰ The data of these stock market indices are also collected from the New York Stock Exchange. For the stock market indices, data on the closing price of the last day of the year from 2005 to 2020 were used.

Statistical Analysis

Pearson Correlation

Pearson correlation was used to analyze the correlation between annual TECP and US stock market indices. The variables were analyzed independently. Statistical significance was set at a P value less than 0.05.

Multiple Regression Analysis

The authors used multiple linear regression analysis to identify the relationship between TECP and major economic indicators. The multiple linear regression model is as follows:

$${\displaystyle \begin{array}{l}{\displaystyle \mathrm{Y}={\beta }_0+{\beta }_1{\mathrm{X}}_1+{\beta }_2{\mathrm{X}}_2+{\beta }_3{\mathrm{X}}_3+...+{\beta }_{\mathrm{k}}{\mathrm{X}}_{\mathrm{k}}+\epsilon }\end{array}}$$

This formulation explains the statistical relation between the single continuous outcome Y, which is the responsible variable, and the predictor variables X_k (k = 1, 2,..., k). β₀ represents the mean of Y, when all X_k = 0. β₁, β₂,..., β_k are unknown regression coefficients, a slope with respect to X_k. Ɛ represents the error term with a normal distribution.¹¹ The stock indices were used as the dependent variables, and TECP, US GDP, median income of US citizens, and US population were analyzed as independent variables.

Four stepwise multiple regression analyses with each stock market index were conducted. Statistical significance was set at a P value less than 0.05. Multicollinearity occurs when independent variables are correlated with each other. It is important to take multicollinearity into consideration in multiple regression analysis because it increases the variance of the coefficient estimates and affects statistical significance or statistical interpretation.¹² To avoid this problem, we analyzed each stock market index separately. In this study, the R value, tolerance (TOL), variance inflation factor (VIF), and condition number (CN) were used to check for multicollinearity among the predictor variables. Multicollinearity was considered if one of the following existed: R ≥ 0.9; VIF ≥ 10; TOL < 0.1; CN ≧ 15.¹³

RESULTS

Data from 2005 to 2020

Total Expenditure for Cosmetic Surgery and Minimally Invasive Procedures

The TECP has more than doubled since the years 2005 to 2020. Although there were significant decreases between 2008 and 2020, the expenditure on cosmetics showed an increasing trend (Fig. 1).

Fig. 1.

Expenditure on surgical cosmetic procedures and minimally invasive cosmetic procedures by year. The unit is billion dollars.

The percentage of expenditure on surgical cosmetic procedures was about 60% in 2005, but it decreased below 50% in 2018. However, in 2019 and 2020, it has recovered above 50% (Fig. 2).

Fig. 2.

Percentage of expenditure on surgical cosmetic procedures and minimally invasive cosmetic procedures by year. The unit is percentage (%).

Stock Market Indices

The NASDAQ 100 index increased continuously, except in 2008. There were minimal increases in 2010 and 2016. The S&P 500 index, DJIA, and Russell 2000 index moved the same as the NASDAQ 100 index. Unlike the NASDAQ 100 index, they decreased in 2015 (Table 1).

Table 1.

Total Expenditure on Cosmetic Procedures, Stock Market Indices, and Other Economic Indicators from 2005 to 2020

Year	Total Expenditure on Cosmetic Procedure	NASDAQ 100 Index	S&P 500 Index	DJIA	Russell 2000 Index	US GDP	Median Income of US Citizens	US Population
2005	9,433,551,672	1645.20	1248.29	10,717.50	673.22	13,039.20	64,427	295,516,599
2006	11,355,870,657	1756.90	1418.30	12,463.15	787.66	13,815.59	64,930	298,379,912
2007	12,428,444,596	2084.93	1468.36	13,264.82	766.03	14,474.23	65,801	301,231,207
2008	10,293,431,401	1211.65	903.25	8776.39	499.45	14,769.86	63,455	304,093,966
2009	10,013,973,541	1860.31	1115.10	10,428.05	625.39	14,478.06	63,011	306,771,529
2010	10,135,689,068	2217.86	1257.64	11,577.51	783.65	15,048.96	61,364	309,327,143
2011	10,434,350,360	2277.83	1257.60	12,217.56	740.92	15,599.73	60,428	311,583,481
2012	11,005,969,849	2660.93	1426.19	13,104.14	849.35	16,253.97	60,313	313,877,662
2013	12,631,581,051	3592.00	1848.36	16,576.66	1163.64	16,843.19	62,425	316,059,947
2014	12,927,615,364	4236.28	2058.90	17,823.07	1204.70	17,550.68	61,468	318,386,329
2015	13,383,178,199	4593.27	2043.94	17,425.03	1135.89	18,206.02	64,631	320,738,994
2016	16,438,680,911	4863.62	2238.83	19,762.60	1357.13	18,695.11	66,657	323,071,755
2017	16,760,022,499	6396.42	2673.61	24,719.22	1535.51	19,747.96	67,571	325,122,128
2018	16,507,440,034	6329.97	2506.85	23,327.46	1348.56	20,527.16	68,168	326,383,199
2019	23,731,789,413	8733.07	3230.78	28,538.44	1668.47	21,372.57	72,808	328,329,953
2020	20,174,266,026	12888.28	3756.07	30,606.48	1974.86	20,893.74	71,186	331,501,080
Growth rate	113.85%	683.36%	200.89%	185.57%	193.34%	60.23%	10.49%	12.17%

Other Economic Indicators

The US GDP increased slightly but continuously from 2005 to 2020, except in 2009 and 2020. The median income of US citizens moved diversely. After a 3-year-long increase, it decreased continuously until 2014, except in 2013. From 2015, it increased for 5 years in a row. However, it decreased in 2020. The population of the US increased from 2005 until 2020.

Results of Pearson Correlation Calculations

TECP revealed statistically significant correlations with all other indicators (Table 2). Among them, TECP had the greatest correlation with DJIA (r = 0.952, P < 0.001). Other major stock market indices, such as S&P 500, showed a similar correlation with TECP. The US population had the least correlation with TECP (r = 0.821, P < 0.001). DJIA had the highest correlation coefficient with the S&P 500 index (r = 0.993, P < 0.001). The median income of US citizens had the least correlation with DJIA (r = 0.821, P < 0.001).

Table 2.

Statistical Correlation Measures Assessing the Relationship between the TECP in the US and Major Economic Indicators from 2005 to 2020

Correlation	Pearson Correlation Coefficient	P
TECP & NASADAQ 100 index	0.897	<0.001
TECP & S&P 500 index	0.940	<0.001
TECP & Dow Jones Industrial Average	0.952	<0.001
TECP & Russell 2000 index	0.914	<0.001
TECP & US GDP	0.905	<0.001
TECP & Median income of US citizens	0.891	<0.001
TECP & US population	0.821	<0.001
Dow Jones Industrial Average & TECP	0.952	<0.001
Dow Jones Industrial Average & NASDAQ 100 index	0.961	<0.001
Dow Jones Industrial Average & S&P 500 index	0.993	<0.001
Dow Jones Industrial Average & Russell 2000 index	0.985	<0.001
Dow Jones Industrial Average & US GDP	0.944	<0.001
Dow Jones Industrial Average & median income of US citizens	0.821	<0.001
Dow Jones Industrial Average & US population	0.889	<0.001

TECP, total expenditure on cosmetic surgery and minimally invasive cosmetic procedures.

Results of Multiple Regression Analysis

Among all possible calculations, only one calculation showed a significant relationship: the NASDAQ 100 index as a dependent variable and TECP as an independent variable (Table 3). Adjusted R² was 0.790, which means TECP has 79% of explanatory power in NASDAQ 100 index. In the analysis of variance, F = 57.446, P < 0.001; this means the regression model was adequate. The t value of total expenditure on cosmetic procedures is 7.579, and the P value is less than 0.001; this means the null hypothesis is rejected and the opposing hypothesis is adopted. As a result, the independent variable total expenditure on cosmetic procedures affects the dependent variable NASDAQ 100 index.

Table 3.

Multiple Linear Regression Results

Variable	Unstandardized Coefficient		Standardized Coefficient	t(p)	TOL	VIF
	B	SE	β
(constant)	−5165.178	1288.026		− 4.010 (0.001)
TECP	6.891E−7	0.00	0.897	7.579 (< 0.001)	1.00	1.00
GDP			0.417	1.573 (0.140)	0.180	5.545
Median income			− 0.038	− 0.038 (0.890)	0.206	4.849
Population			0.363	0.363 (0.079)	0.326	3.067
F(p)	57.446 (<0.001)
Adjusted R2	0.790

NASDAQ 100 index as dependent variable and TECP, US GDP, median income of US citizens, US population as independent variables. TECP, total expenditure on cosmetic surgery and minimally invasive cosmetic procedures.

The completed regression equation is as follows:

$${\displaystyle \begin{array}{l}{\displaystyle \mathrm{N}\mathrm{A}\mathrm{S}\mathrm{D}\mathrm{A}\mathrm{Q}100\mathrm{i}\mathrm{n}\mathrm{d}\mathrm{e}\mathrm{x}=-5165.176+(6.891\times 10^{-7})\times \mathrm{T}\mathrm{E}\mathrm{C}\mathrm{P}}\end{array}}$$

In other words, if the TECP increases by 1, the NASDAQ 100 index increases by 6.891 × 10⁻⁷. The standardized coefficient β is 0.897, which means that TECP exerts as much positive influence as 0.897 on the NASDAQ 100 index. The coefficient β of GDP has a positive influence of 0.417, the median income of US citizens has a negative influence of 0.038, and the US population has a positive influence of 0.363. However, the P values of the US GDP, median income of US citizens, and US population are greater than 0.05. This means that they are not statistically significant in multiple regression analysis, considering all possible independent variables (Table 3).

Multicollinearity and TECP

In the same analysis, TECP does not meet the criteria of multicollinearity. It satisfies R less than 0.9, TOL 0.1 or more, VIF less than 10, and CN less than 15. To put it all together, these results are statistically significant.

Multicollinearity and Other Indicators

Other analyses, with S&P 500 index and DJIA as independent variables, have a P value of less than 0.05, but they met the criteria of multicollinearity, and statistical significance could not be derived. The R, TOL, VIF, and CN of analysis, with each stock market index as dependent variable and total expenditure on cosmetic procedures, GDP, median income, and population as independent variable, are shown in Table 4. The P value of Russell 2000 as the dependent variable was 0.082, which means it was not statistically significant.

Table 4.

R, TOL, VIF, CN of Multiple Regression Analysis with Each Stock Market Index as Dependent Variable and TECP, US GDP, Median Income of US Citizens, and US Population as Independent Variables

Stock Market Index	R	TOL	VIF	CN
NASDAQ 100 index	0.897	1.00	1.00	7.024
S&P 500 index	0.940	1.00	1.00	7.024
DJIA	0.952	0.180	5.545	32.734

TECP, total expenditure on cosmetic surgery and minimally invasive cosmetic procedures.

DISCUSSION

Over the past 15 years, expenditures on cosmetic surgery and minimally invasive procedures in the United States have grown by 113.85%. On an annual average, it is 7.59%. Compared with the US GDP of 60.23% and an annual average of 4.01%, the cosmetic surgery industry has achieved more growth than the average of other industries.

NASDAQ 100 had increased more than S&P 500 or Russell 2000. In other words, the US stock market grew mainly in large technology stocks rather than in small or value stocks. However, during the 2008 financial crisis, we saw a severe downturn in the US stock market. The NASDAQ 100 was down nearly 40% at the time. During that time, US TECP also declined, but by less than 20%.

The US GDP actually rose in 2008. Despite the global financial crisis, the TECP and stock market indices decreased. In other words, there was a correlation between TECP and stock market indices such as NASDAQ 100 and S&P 500. Unlike the US GDP, TECP and the stock market showed similar movements, even under unusual circumstances such as the global financial crisis. Then, the authors tried to find out the cause and effect or which preceded the other.

In the multiple regression analysis model performed in this study, the authors excluded variables with multicollinearity to determine cause and effect. It was observed that the NASDAQ 100 index significantly increased when TECP in the United States increased. However, when the dependent variable was set to TECP and the independent variable was set to US stock market indices, there were no statistically significant results.

What does it mean for the NASDAQ 100 index to rise when TECP increases? The increase in cosmetic spending is probably the result of a socially complex phenomenon. If the income of individuals in the United States increases and the GDP of a country rises, the size of the US cosmetic surgery market will naturally grow. However, in the 15 years from 2005 to 2020, the median income of US citizens increased by only 10.49%. US GDP rose by 60.23%, but the significantly lower increase in the median income of US citizens could mean that wealth grew for a few Americans rather than being distributed equally.

There is also a research result that the rich became richer during that time.¹⁴ This way, wealth is concentrated among a small number of rich people, and those who become richer can do more shopping for cosmetic procedures. The rich, who get cosmetic procedures more frequently, will have a younger and more attractive appearance, and this phenomenon could lead to admiration for the wealthy among the general public. Since there is obviously a limit to increases in incomes earned from labor, many people are interested in investment returns through stock or real estate.¹⁵ The general public may have a preference for stock investments over real estate because stock investment can be easily done with relatively small amounts of money compared to real estate investments.

Like the dot-com bubble period in the stock market, the public invests mainly in technology stocks, which are frequently discussed in the media and described as having brilliant growth potential.¹⁶ Even without following the Buffett index, one can see that the US stock market indices in 2020, especially the NASDAQ 100, have a huge bubble. In 15 years, the US GDP rose only 10.49%, while the NASDAQ 100 rose 683.36%.

The authors found that these social changes over the past 15 years have grown the wealth of a few rather than the majority in the United States. As a result, the wealthy few who have increased their assets have had a lot of cosmetic procedures, and their improved appearance is envied by the general public. The authors believe that it may have led to investment in technology stocks by the American public, who wanted to be like the rich. In addition, if global economic crises, such as the dot-com bubble in 2001 and the global financial crisis in 2008, occur again, the market of cosmetic surgery and minimally invasive procedures, which had grown twice as fast as the US GDP, could be hit relatively more severely than other industries.

This study had some limitations. First, we tried to determine any statistical relationship using Pearson correlation and multiple regression analysis. They revealed a linear relationship among the costs of cosmetic surgery, stock market indices, and other economic variables. However, it is not possible to rule out the effects of US GDP and population growth due to multicollinearity. Further research is required to investigate the effects of these variables. Secondly, the year 2020 was the start of the global COVID-19 pandemic. As we do not know the exact interactions between the COVID-19 pandemic and the US stock market and market of cosmetic procedures, more studies are needed to integrate this pandemic event.

CONCLUSIONS

There was a statistically significant correlation between the TECP in the US and the major indices of the US stock market. In particular, the increase in TECP led to the rise of the NASDAQ 100 index.

DISCLOSURE

The authors declare no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

ACKNOWLEDGMENT

There is no need for ethical approval in this study.