What Luxury Consumption Reveals About Human Nature
In the popular imagination, the luxury consumer moves through the world with effortless grace. They buy what is beautiful, what is well-made, and what speaks to their refined tastes. For the behavioral economist, the luxury market represents something far more intriguing: a window into the social and psychological forces that shape decision-making. Consider this. A watch that tells time no better than a smartphone costs $100,000. A handbag made from leather performs the same basic function as one costing fifty times less. Yet luxury brands continue to thrive, and consumers willingly pay enormous premiums. This article investigates why humans place extraordinary value on luxury goods, how brands cultivate that value, and what luxury consumption reveals about human nature. What Makes a Product Luxurious? Scholars have struggled to reach a consensus on a single definition of luxury. Kapferer and Bastien describe luxury as “a culturally sophisticated product that is social stratification.”...