Yes, it's exactly as morbid as it sounds (though when I saw the headline I initially thought it was referring to those people who
don't wash their jeans).
"Necropants are part of a complicated sorcery for gaining money,” Atlason explains. “The owner of necropants had to make a deal with a male friend while still alive about digging up his body after a natural cause of death, skinning it below the waste and wearing the skin as necropants."
Read about the Museum of Sorcery & Witchcraft in the Iceland Review.
