Sports Illustrated Swimsuit Issue Indicator

What Is the Sports Illustrated Swimsuit Issue Indicator?

The Sports Illustrated Swimsuit Issue Indicator is an economic indicator that correlates the performance of the S&P 500 in a given year with the nationality of the model who appears on the cover of that year’s Sports Illustrated swimsuit issue.

Understanding the Sports Illustrated Swimsuit Issue Indicator

The Sports Illustrated Swimsuit Issue Indicator is an economic indicator positing that the U.S. stock market performs better in years when the model on the cover of the Sports Illustrated swimsuit issue is American. The indicator suggests that when the cover model is from the U.S., the S&P 500 will generate a return above its historical rate, while a non-American cover model leads to underperformance by the S&P 500 for the year.

The Sports Illustrated swimsuit issue has been an annual publication since the 1950s, although the nationalities of the cover models were not always made available until 1978. Between 1978 and 2012, Sports Illustrated featured 19 American models and in those years the overall S&P 500 average return was a 14.3 percent gain, with positive returns 88.2 percent of the time.

In contrast, during the years in which non-American models were featured, the S&P 500 experienced an average gain of 10.8 percent, with positive returns 76.5 percent of the time. A frequently-cited example is 1997, the year American model Tyra Banks graced the Sports Illustrated cover, and the S&P 500 was up 34.1 percent.

As with many popular culture based indicators, this is not a precise measure. In fact, in 2008, when Sports Illustrated featured American model Marissa Miller on its cover, the S&P 500 plummeted, significantly skewing the averages for this indicator.

Economic Indicators in Popular Culture

The Sports Illustrated Swimsuit Issue Indicator is just one of many indicators rooted in popular culture phenomena, standing alongside a host of other indicators posed by analysts and investors since the beginning of the stock market. These indicators describe market tendencies and possess limited accuracy, but they remain intriguing ways to look at the ways culture and markets interact.

It is important to distinguish between those that are purely coincidental, and thus should not be considered reliable, and those that have some reasonable basis in economic theory and may be worth considering at least in a qualitative sense. 

Spurious Indicators

The Sports Illustrated Swimsuit Issue Indicator is an example of a spurious indicator. These are “indicators” that have no real or theoretical causal relationship to the economic or financial variables, but do have a purely coincidental correlation. Businesses and investors should be cautious not to take such indicators seriously in their planning or investment decisions. 

Another example of a spurious indicator is The Super Bowl Indicator, which suggests that the stock market will decline when a team from the American Football Conference wins the Super Bowl, and that an upswing will occur when the National Football Conference team wins. Introduced in 1978 by sportswriter Leonard Koppett, this indicator boasts only an 80% accuracy and, as with the Sports Illustrated Swimsuit Issue Indicator, failed to accurately predict the 2008 downturn.

Potentially Plausible Indicators

On the other hand, some pop culture economic indicators may have some reasoned basis in economic thinking, despite often being somewhat zany or even off-color. Examples include:

The Skyscraper Index is based on the observation by economist Andrew Lawrence that when the world’s-tallest-building skyscrapers are built, major recessions tend to follow. Lawrence noted that monetary expansion and resulting over investment might connect the two events, and later economist Mark Thornton explicitly documented the linkage from expansionary monetary policy to distortions in the pattern of investment in an economy that both encourage investments in such structures and lead also to necessary corrections in the economy in the form of a recession. Notably, Thornton used his research to accurately predict the 2008 financial crisis and Great Recession. 

The Hemline Indicator proposes that skirt hemlines are higher when the economy is performing better, such as the high hemlines of the 1990s when the tech bubble was forming. First posed in 1925 by George Taylor of the Wharton School of Business, this indicator may have some basis in fact to the extent that women can signal their “type” in marriage and/or job markets through their manner of dress. This thinking goes that men (and employers) may tend to prefer women in shorter skirts during the bold and risque times of an economic boom and prefer women in longer, more conservative skirts during times of economic gloom and recession.  

The Men’s Underwear Indicator, a favorite of former Federal Reserve Chair Alan Greenspan, suggests that declines in the sales of men’s underwear indicate a poor overall state of the economy, while an upswing in underwear sales predicts an improving economy. Men’s underwear is one of the least visible portions of a man’s wardrobe, so it might reasonably be expected to be one of the first places where men will cut back spending if they believe that their job prospects and expectations of future performance of the economy are in doubt. 

The Hot Waitress Index comes from the common observation that during times of economic recession, the relative attractiveness of waitstaff tends to rise. It is well documented that more physically attractive people tend to command a premium in wages and hiring in job markets. However, during a general recession, some of them will be laid off from higher-paying jobs as well. More physically attractive candidates may then be willing to take lower status work, especially in occupations such as waiting tables where their beauty may confer an extra advantage. Conversely, during economic boom times, they will have an advantage over less attractive candidates in seeking higher status work, and the average attractiveness of waitstaff will tend to fall.