Luxury goods are usually defined as items that people in relatively prosperous positions tend to buy. Luxury goods, by their very nature, tend to be expensive – and when they are expensive, they tend to be very exclusive and difficult to access. As opposed to basic necessities such as food and shelter, luxury goods are usually purchased with an eye to their rarity and exclusive status (for example, an item may be considered ‘uniquely rare’). The term ‘luxury’ has a rather specific meaning in the eyes of the law: it is to some degree an intangible asset. This definition gives us some important clues as to what makes luxury goods so desirable – but also, it provides a useful barometer against which to compare other more common forms of wealth.
In economics, a luxury product is a superior good for which demand increases faster than proportionate income increases, so that expenses on the item to keep pace with rising income. Luxury goods are therefore products that are bought because they are desired by people who have enough money to purchase them; this makes them somewhat like a zero sum game, where one person’s loss is offset by another’s gain. It is important to note, however, that just because someone purchases something doesn’t mean they will actually spend that money: if they don’t have the money to buy it then they are not ‘considered’ buyers, and their loss is therefore offset by the gain of another person.
Luxury goods generally fall into one of three categories: names brands, celebrity labels, or brands owned by a limited company. Luxury brand names are normally the products of a well-known company with a recognized reputation. Celebrity labels are those of individuals or companies who are popular enough to be associated with luxury brands – either because they endorse the brand, or because they are related to the person or business whose product it is.