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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.
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Sumptuary law
Sumptuary laws (from Latin sūmptuāriae lēgēs) are laws that try to regulate consumption. Black's Law Dictionary defines them as "Laws made for the purpose of restraining luxury or extravagance, particularly against inordinate expenditures for apparel, food, furniture, or shoes, etc." Historically, they were intended to regulate and reinforce social hierarchies and morals through restrictions on clothing, food, and luxury expenditures, often depending on a person's social rank.
Veblen good
A Veblen good is a type of luxury good for which the demand increases as the price increases, in apparent contradiction of the law of demand, resulting in an upward-sloping demand curve. The higher prices of Veblen goods may make them desirable as a status symbol in the practices of conspicuous consumption and conspicuous leisure. A product may be a Veblen good because it is a positional good, something few others can own. Veblen goods are named after American economist Thorstein Veblen, who first identified conspicuous consumption as a mode of status-seeking (i.
Status symbol
A status symbol is a visible, external symbol of one's social position, an indicator of economic or social status. Many luxury goods are often considered status symbols. Status symbol is also a sociological term – as part of social and sociological symbolic interactionism – relating to how individuals and groups interact and interpret various cultural symbols. The term "status symbol" was first written in English in 1955, but from 1959 with the publication of the bestseller "The Status Seekers" greater distribution.