Veblen goods, named after economist Thorstein Veblen, are luxury items or services in high demand due to their exclusivity and high price. These goods often have a prestige value associated with them, and the fact that they are expensive makes them more desirable to certain consumers. This is known as the “Veblen effect.” From luxury automobiles to designer fashion, Veblen goods are often highly sought after and viewed as status symbols—the exclusivity and rarity of these goods make them desirable.
Veblen goods also tend to be considered “experiential” luxury, meaning they are not just about owning a material object but about the experience and emotions that come with it. This can include the thrill of acquiring a highly sought-after item, the social status of owning it, and the feeling of exclusivity it provides.
In recent years, there has been a growing trend among UHNWIs towards experiential luxury, leading to an increase in demand for Veblen goods. From private jets and yachts to bespoke tailoring and luxury vacations, UHNWIs are increasingly looking for ways to stand out and differentiate themselves.
The art market is one of the sectors where Veblen goods are in high demand, and it has shown strong growth in recent years. The fact that art is unique and has a limited number of pieces makes it a perfect Veblen good. The exclusivity and prestige associated with owning a rare masterpiece can be incredibly appealing to UHNWIs, and the market has responded accordingly.
Another sector where Veblen goods are in high demand is the luxury real estate market. The exclusivity and prestige of owning a luxury property can be incredibly appealing. This has led to a growing trend of highly exclusive luxury properties, such as private islands and high-security compounds.
The luxury car market is also a sector where Veblen goods are in high demand. The exclusivity and prestige of owning a luxury car can be incredibly appealing to UHNWIs. This has led to a growing trend of limited-edition and bespoke luxury cars.
Philanthropy, too, can be seen as a Veblen good. Giving large donations to charitable causes and foundations can provide a sense of prestige and exclusivity, as well as the satisfaction of making a positive impact on the world.
For a range of Veblen goods and other luxury items, please visit The Voice of Luxury—Insignia’s e-commerce platform.