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Concept
Luxury goods
Summary
In economics, a luxury good (or upmarket good) is a good for which demand increases more than what is proportional as income rises, so that expenditures on the good become a greater proportion of overall spending. Luxury goods are in contrast to necessity goods, where demand increases proportionally less than income. Luxury goods is often used synonymously with superior goods.
The word "luxury" derives from the Latin verb luxor meaning to overextend or strain. From this the noun luxuria and verb luxurio developed, "indicating immoderate growth, swelling, ... in persons and animals, willful or unruly behavior, disregard for moral restraints, and licensciousness", and the term has had negative connotations for most of its long history. One definition in the OED is a "thing desirable but not necessary". A luxury good can be identified by comparing the demand for the good at one point in time against the demand for the good at a different point in time, at a different income level. When personal income increases, demand for luxury goods increases even more than income does.
Conversely, when personal income decreases, demand for luxury goods drops even more than income does. For example, if income rises 1%, and the demand for a product rises 2%, then the product is a luxury good. This contrasts with necessity goods, or basic goods, for which demand stays the same or decreases only slightly as income decreases.
With increasing accessibility to luxury goods, new product categories have been created within the luxury market, called "accessible luxury" or "mass luxury". These are meant specifically for the middle class, sometimes called the "aspiring class" in this context. Because luxury has now diffused into the masses, defining the word has become more difficult.
Whereas luxury often refers to a certain types of products, luxury is not restricted to physical goods; services can also be luxury. Likewise, from the consumer perspective, luxury is an experience that has been defined as "hedonic escapism.
Official source
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