In economics, a luxury good (or upmarket good) is a product or item or service for which demand increases more than what is proportional as income rises, so that expenditures on the good become a more significant proportion of overall spending. Luxury goods are in contrast to necessity goods, where demand increases proportionally less than income. Whereas people consume necessity goods to meet basic survival needs, luxury goods are consumed both for their "intrinsic quality and to signal their wealth and confirm social status." In economics, luxury goods is often used synonymously with superior goods.
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👉 Luxury good in the context of Conspicuous consumption
In sociology and in economics, the term conspicuous consumption describes and explains the consumer practice of buying and using goods of a higher quality, price, or in greater quantity than practical. In 1899, the sociologist Thorstein Veblen coined the term conspicuous consumption to explain the spending of money on and the acquiring of luxury commodities (goods and services) specifically as a public display of economic power—the income and the accumulated wealth—of the buyer. To the conspicuous consumer, the public display of discretionary income is an economic means of either attaining or maintaining a given social status.
The development of Veblen's sociology of conspicuous consumption also identified and described other economic behaviours such as invidious consumption, which is the ostentatious consumption of goods, an action meant to provoke the envy of other people; and conspicuous compassion, the ostentatious use of charity meant to enhance the reputation and social prestige of the donor; thus the socio-economic practices of consumerism derive from conspicuous consumption.
In this Dossier
Luxury good in the context of Progressive tax
A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term progressive refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate. The term can be applied to individual taxes or to a tax system as a whole. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability to pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay. The opposite of a progressive tax is a regressive tax, such as a sales tax, where the poor pay a larger proportion of their income compared to the rich (for example, spending on groceries and food staples varies little against income, so poor pay similar to rich even while latter has much higher income).
The term is frequently applied in reference to personal income taxes, in which people with lower income pay a lower percentage of that income in tax than do those with higher income. It can also apply to adjustments of the tax base by using tax exemptions, tax credits, or selective taxation that creates progressive distribution effects. For example, a wealth or property tax, a sales tax on luxury goods, or the exemption of sales taxes on basic necessities, may be described as having progressive effects as it increases the tax burden of higher income families and reduces it on lower income families.
Luxury good in the context of Srivijaya Empire
Srivijaya (Indonesian: Sriwijaya), also spelled Sri Vijaya or Sriwijaya, was a Malay thalassocratic empire based on the island of Sumatra (in modern-day Indonesia) that influenced much of Southeast Asia. Srivijaya was an important centre for the expansion of Buddhism from the 7th to 11th century AD. Srivijaya was the first polity to dominate much of western Maritime Southeast Asia. Due to its location, Srivijaya developed complex technology using maritime resources. In addition, its economy became progressively reliant on the booming trade in the region, thus transforming it into a prestige goods-based economy.
The earliest reference to it dates from the 7th century. A Tang dynasty Chinese monk, Yijing, wrote that he visited Srivijaya in 671 for six months. The earliest known inscription in which the name Srivijaya appears also dates from the 7th century in the Kedukan Bukit inscription found near Palembang, Sumatra, dated 16 June 682. Between the late 7th and early 11th century, Srivijaya rose to become a hegemon in Southeast Asia. It was involved in close interactions, often rivalries, with the neighbouring Mataram Kingdom, Khmer Empire and Champa. Srivijaya's main foreign interest was nurturing lucrative trade agreements with China which lasted from the Tang to the Song dynasty. Srivijaya had religious, cultural and trade links with the Buddhist Pala of Bengal, as well as with the Islamic Caliphate in the Middle East.
Luxury good in the context of Veblen goods
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. They are named after American economist Thorstein Veblen who described the contradiction.
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.