The Luxury Paradox.
By: Lizzy 9.2
“Higher prices didn't cause the expected higher demand.” -George Lowery
People say that more expensive things are better in quality, although I do believe it to some extent, this is not always true. In 2017, a study from The California Institute of Technology (Caltech) and Stanford University (add- ‘was conducted, where...’) scholars gave people the same bottle wine, but were told the prices were different, ranging from cheap to expensive. The consumers said that the wine had a higher cost was tastier. Then, the researchers studied their brains. The MRI scanner showed that our brains tend to be more active when engaging with expensive items.
I will give an example of my own experience. My mother had once asked me to pick between some distasteful seasoning and salmon seasoning. The sour tuna seasoning had a higher price. As a person who likes salmon, I knew the salmon would’ve made me happier than the weird seasoning. However, as it was more expensive, I had thought to myself, “maybe it’s better.” Ever since then, I am now forced to finish the salmon before the expiration date (maybe if I secretly throw it away, my mother wouldn’t know).
If a person had a liking for a sour taste and liked that seasoning, then what they had bought would be considered a worth-the-money for them. However, as a person who does not enjoy that taste, I feel a sense of regret, and that was not worth the money. My point is, we should understand what we like and what we think suits ourselves, more than being swayed by the price. Many psychologists agree that the idea that most expensive goods are better is not true.
A way to avoid this is by thinking the expensive and inexpensive items are the same price and then evaluate and contrast. This would make our brains consider which item would suit ourselves more.
Another example is Bill Gates. All he wears are simple sweaters or button-down shirts instead of expensive clothing brands like Gucci. Why? Because he wants function and practicality. It was reported that he learned from Warren Buffet that there is no need to be more comfortable in luxury clothes, and repeating what you wear is a good habit, for you are going to replace it sometime in life anyway. He wears a $50 watch instead of a $3000 watch.
Author Franklin Veux said that, “Expensive luxury watches are mechanical… (and) are less accurate than battery-powered quartz… Expensive watches are not primarily timepieces, they’re (often) wealth displays.”
The topic that we are talking about is the Veblen effect. The Veblen effect can be explained in two ways:
The Veblen effect are goods where the demand increases as the price increases.
The Veblen effect is the behavior where high-priced goods are sold, even when a similar low-priced goods are available with the same needed functions.
However, they all lead to the same route in the end. And this is all due to us believing that the things that cost more are to be better in quality.
“The category of expense is a need.” -Paula Pant
Let’s say you liked a hamburger designed bag. One day, I give you a hamburger designed bag for as a birthday gift and your friend gave you a limited chicken wing designed bag. I said mine was $20, and they said theirs were $4000. Their bag costs 200 times more than mine. In our context of the world of, “Rich is better,” we would assume that the chicken wing designed bag is better. Now, would you walk around with your favorite chicken wing designed bag, or a $4000 limited designed bag? If you liked purple colored apples, and I bought a purple colored apples clothing worth 10$ for you, would you wear it comparing it to your friend who bought you Gucci?
It is not a simple question with a correct answer. But actually, more people would choose to wear something that’s more expensive to demonstrate their wealth and boost their ego, feeling like they’ve accomplished something, whether they had bought it or not.
This also centers between understanding what you need and what you want. We all have desires: A specific desire. If we see something that is considered “better” but does not relate to our needs, we go around our needs, and say “maybe this is going to be better.” What we don’t understand is that this is what we want, it’s not what we need. If I needed clothes and buying a Gucci would be considered what I want, than let’s say buying normal clothes is what would be what I need. Buy what you need, is what is essential to your life. Buy what you want, is what increases your quality of life. I can’t guarantee that by buying Gucci, it would improve my quality of life, however from what we’ve discussed, we would automatically think so. But if a person only wear Gucci, and has a closet full of only Gucci, then their Gucci clothes is considered a need.
In fact, I have read an article that highlights the secret of marketing success behind luxury brands. The first paragraph writes, “The majority of the time, the purchase is lavish and often based on an emotional desire rather than a real need.” What is this emotional desire? Is it attention? Is it a story? Or is it simply an inner desire? In truth, they are all correct. What’s surprising is that this is all a want. Not a need.
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