Why do we purchase costly things? The logic of luxury

It is believed that a higher price for a product implies its better quality, a certain exclusivity, and other bonuses. This is often the case, but this is not always what motivates people to overpay for a product, even if there is a cheaper alternative.

The fact is that consumption is a social competition. In addition to meeting our basic needs by buying expensive goods, we try to identify our status as “above average”, to show that “I can afford”, unlike others.

Studies have shown that when perceiving the value of a product, a person involuntarily associates its value with quality, thereby often attributing more favorable qualities to an expensive product in comparison with its cheap counterparts, even if there are none.

This is confirmed by an experiment conducted by scientists from the California Institute of Technology and Stanford University, which revealed that people appreciate the taste of wine much higher after they learn about its high cost.

But the experiments demonstrate only a local result of consumer assessments. But how does the price of a product affect our decisions in real life? Do people really prefer expensive things only because of their high quality, or are there more weighty social prerequisites here? Michael Norton, a psychologist, and professor of business administration at Harvard Business School, tried to answer these questions. Norton argues that the mechanism for evaluating expensive goods largely rests on the uniqueness of its accompanying sensations. “The increased pleasure from the quality of an expensive product is accompanied by an additional emotional impulse. Perhaps it is much more pleasant to drink whiskey worth $10,000 per bottle because, along with the taste of the drink, a person gets a rare extreme experience,” Michael Norton summarizes his observations.

This is somewhat similar to choosing a tour for a trip. The value of a trip to some exotic country fully corresponds to the high cost of the tour only for the fact that the resulting impressions will be unique. That’s why people are willing to spend a lot of money on a flight and go to the other side of the world. If, for example, the mountain landscapes of Chile were accessible to everyone, then the sensations from their appearance would not be of such value to us and would not cause a desire to pay for them.

But in addition to the objective, market reasons to overpay for a product, each of us is faced with examples of image investments when a person buys a thing because of the brand reputation. If we assume that the high cost of a Ferrari car is associated with its power, then its power cannot be called the main reason why a wealthy person prefers this brand of car to other, more practical cars in urban conditions. In this case, the owner of a Ferrari does not just buy a car — he acquires an indicator of his status, which is a pass to a certain circle of society.

Since money is the most natural equivalent of success, the willingness to purchase expensive things is the main male demonstration of superiority.

The evolutionary algorithm has formed in males of some species the need to attract the attention of females. For example, a peacock spreads its bright tail and makes characteristic sounds for this purpose. In deer, large horns and a loud roar perform this function of attracting attention. By their inherent instinct, these and many other animals are forced to denote their superiority over other males, which can be expressed by loud sounds, appearance, or unusual behavior.

According to many supporters of evolutionary psychology, some men who prefer expensive things to cheap ones are guided by similar biological reflexes. Calling our consumer habits “social competition,” Norton emphasizes the importance of contrasting ourselves with others. And if bodily methods achieve the animals’ interest in themselves, then people use the main social tool for this — money.

This explains the desire of men to present expensive gifts to women. After all, along with his status, a man, in this case, proves the seriousness of his intentions, confirmed by some sacrifice. In other words, everyone can give one rose, but, for example, a gold necklace – no. And if social positioning did not require large material or labor costs from men, then all the pleasures of the world would lose all value simply because of their easy accessibility.

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