What Makes a Luxury Item?
In economics, a luxury item is something that is purchased with an increase in income more than proportional to the increase in expenditure, so that total expenses on the item decrease more than proportional to the increase in income. If the item has a positive effect on expenditure, then it is said to be a luxury good and if it has a negative effect on expenditure, then it is classed as a luxury item. Therefore, luxury items are very expensive, whereas necessities are not so expensive. The things that constitute luxury are not only limited to expensive dresses, perfumes, and so on, but also include luxuries like holidays, time off, and private transport.
Luxury items tend to be bought by people who have money so they are considered luxury services rather than luxury items. For instance, a yacht would be considered luxury items, but it may be owned by an affluent individual because of the cost involved. The increase in income may also be the reason for an increase in the price of luxury items, but this generally occurs in the case of newly built yachts. Similarly, luxury goods are those that are created or designed for very special purposes, and hence are very expensive.
Luxury goods are mainly designed to enhance comfort and relaxation, with some of them also having other purely aesthetic uses. Luxury goods and services differ from the mass produced goods, for example, vebbleten goods are not used for normal household chores, but they are made in order to be carried to beaches. This is why they are considered luxury items. Luxury goods and services include luxury hotels, boutiques, restaurants, spas, golf clubs, resorts and so on.