Luxury goods produce positive feelings

  • In some cases, purchasing a luxury item can increase self-esteem and give a sense of belonging.
  • Some people buy luxury goods as a form of retail therapy.
  • Others reward themselves with a luxury item that they typically can't afford.

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The Psychology Behind Why People Buy Luxury Goods

investopedia.com

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Buying luxury brands

Many consumers who buy luxury goods are not in a financial position to afford luxury goods. They do not always act rationally and may spend thousands of dollars on a luxury brand that performs the same function as a similar durable item at a much lower cost.

Many people prefer to buy luxury goods, but the price tag can be off-putting. Unless you earn a high salary or have a great personal savings habit, buying luxury consumer goods can be cost-prohibitive.

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Humans tend to overemphasize the positive elements of a product and ignore the downsides. For example, consumers wait overnight for new releases of certain products, even though other brands have better features and are cheaper.

One reason is that people view non-luxury goods as inferior simply because they are non-luxury. They also conclude that higher-priced goods must be of better quality, regardless if the goods are better or not.

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People prefer to pay the full price for an authentic luxury item over a fake one (even if they look identical).

Researchers found that this desire for authenticity develops in childhood. The sentimentality of the item is part of the reason. If you treat yourself by buying a fake brand, it would be the same as not treating yourself at all.

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Sociologist Juliet Schor, an author of books on consumerism, wealth, and spending, thinks marketers have less to do with what we want than our neighbours, coworkers, or people we follow on social media.

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PPP is an economic theory that compares different countries' currencies through a "basket of goods" approach.

According to this concept, two currencies are in equilibrium or considered being at par—when a basket of goods is priced the same in both countries, taking into account the exchange rates.

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Anxiety encourages us to shop

Throughout time research has proven that shopping enables individuals to relax and forget about their worries. 

Anxiety is one of the most often met reasons that make people choose shopping over any other activity, as this gives us the impression that we can control a situation we have no real control over.

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How Anxiety Affects Our Buying Behaviors

psychologytoday.com