Episode #65: Buying Luxury Goods and Mental Health
In this episode, The X-Team reacts to the article "The Emotions of Luxury" in Psychology Today, written by Peter Noel Murray, Ph.D., principal of a consumer psychology practice in New York City. Dr. Murray's specialty is the psychological drivers of consumer behavior, with an emphasis on emotion.
Listen to this episode at https://podcast.show/studio_talk_mental_health/episode/155502552/
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Today’s topic is The Psychology of Why People Buy Luxury Goods
There is no single mental health issue that drives luxury purchses, but rather several psychological factors and conditions can be involved. For some, luxury spending is part of a diagnosable condition such as Compulsive Buying Disorder (CBD), while for others, it's a coping mechanism for issues like low self-esteem, anxiety, or unresolved trauma.
Compulsive Buying Disorder (CBD)
Also known as "oniomania" or luxury addiction, CBD is a recognized impulse control disorder characterized by a preoccupation with shopping and an uncontrollable urge to acquire goods, which often leads to adverse consequences.
The cycle of addiction: CBD often follows a pattern of anticipation and craving, followed by a rush of excitement during the purchase and, finally, a sense of disappointment, guilt, and emotional emptiness after the high fades.
A "behavioral addiction": Luxury goods can act as a "drug" for people with CBD, especially for those with high net worth. The dopamine rush that comes from buying expensive items can trigger a cycle similar to other behavioral addictions like gambling.
Coping mechanisms and emotional triggers
For many, luxury purchases are used to fill an emotional void or to cope with psychological distress.
Low self-esteem and insecurity: People with low self-worth may use luxury goods as a way to project an image of success and win approval from others.
Anxiety and depression: Shopping can provide a temporary distraction and mood boost to escape from negative emotions. The phenomenon of "doom spending," where people splurge on luxury items to cope with economic and global anxieties, has become more prevalent.
Identity and meaning: Luxury items can be used to construct a desired identity or to provide a sense of control and self-affirmation. Some people rely on external validation and confuse their "net worth with their self-worth.
Unresolved trauma: Negative behaviors and feelings related to money can stem from past trauma and may contribute to overspending.
Narcissism: Some research suggests a link between luxury consumption and the "dark triad" of personality traits: narcissism, Machiavellianism, and psychopathy.
Social and cultural drivers
Beyond individual psychology, broader cultural factors can also intensify the link between mental health and luxury spending.
Societal pressure: A culture that normalizes opulence and pushes for constant achievement can create an expectation of luxury, particularly among high-net-worth individuals.
Social media influence: The curated perfection seen on social media can amplify feelings of inadequacy and drive people to spend in an effort to keep up with others.
Fear of Missing Out (FOMO): Limited-edition luxury products tap into psychological triggers like FOMO, which can drive impulsive purchases.
Article: The Emotions of Luxury in Psychology Today, written by Peter Noel Murray, Ph.D., who is the principal of a consumer psychology practice in New York City. Dr. Murray's specialty is the psychological drivers of consumer behavior, with emphasis on emotion.
How emotions related to "self" and brand "truth" create perceptions of luxury.
When asked about luxury brands, most consumers mention unique design, great quality, high cost, and limited distribution. For many people, these are the characteristics that separate luxury from mainstream products.
A different question is why consumers buy luxury products. Studies show that the appeal of luxury is primarily psychological. These psychological factors, especially emotion, are the focus of my research.
But consumers are also rational beings; they are aware that they can buy products at mass-market retailers that have aesthetics and features similar to luxury brands but are a lot cheaper.
So how does the mind manage these complex behavioral judgments? Is the rational mind more likely to choose the mass market while our emotional mind yearns for luxury? Is it that simple?
Neuroscience tells us that the emotions associated with our judgments guide us in making decisions. Emotions and feelings are components of rationality in that they reveal what is important to us. For example, we can be emotionally drawn to good design, and then rationally decide whether the exceptional qualities of luxury design are worth the additional price versus the "good enough" qualities of a mass-market alternative.
But neuroscience only reveals the process our minds use to make a decision, not why we make one choice versus the alternatives. Evidence suggests that the decisions to purchase a luxury product are overwhelmingly emotional. Purchase behavior is a direct result of how a consumer perceives that a brand delivers the emotional end-benefits of buying and owning.
Emotional End-Benefit: "Who I Am"
Emotional end-benefits impact the consumer’s concept of self and play an important role in motivation. A consumer purchase of luxury brands is frequently driven by perceptions about self-identity, ideal self, social comparison, and other "self" motivations.
Our concept of self is in a constant state of regeneration. Because luxury products have the power to change the consumer’s perception of who they are by altering the self, they deliver desired emotional end-benefits, including self-esteem and hedonic feelings, such as satisfaction and power.
Emotional End-Benefit: "How I Feel"
A different psychological motivation is found in consumers who have a deeper connection to luxury brands. This primarily exists in consumers who have greater financial means and involves high-end luxury brands.
For these consumers, luxury is an integral part of their lifestyle. They experience emotions of trust, security, contentment, and confidence. These emotions are evoked by perceptions that their luxury brands are authentic and timeless. For these consumers, it is not enough that a product is well designed and crafted with the best materials and workmanship. The luxury brands they treasure have the rare and intangible quality of truth.
Luxury brand truth is a visceral connection between the consumer and the brand. While this truth arises from a product’s design and features, it is primarily brought about by a deeper understanding of a brand’s essence. Truth is expressed in narrative and other communication that breathes life into the brand, evoking perceptions of authenticity and timelessness.
In this context of truth, authenticity means that a brand was created to satisfy a vision that expresses excellence in the product category, and that the brand remains faithful to that vision irrespective of shifts in market trends. Timelessness means that the brand will impart feelings of trust, security, contentment, and confidence over the lifespan of ownership.
It is interesting that consumer perceptions of luxury brand truth are not found exclusively in heritage brands with a long and distinguished past. Indeed, consumers identify some classic brands that have lost their veracity, having surrendered their authenticity and timelessness by embracing a style aesthetic or other factor that contradicts their perceived truth. On the other hand, a new brand can achieve truth when its underlying concept embodies the principles of authenticity and timelessness.
From the perspective of this consumer research on luxury, multiple dimensions of emotion affect the luxury consumer. The broader market is motivated by emotions evoked by enhancing perceptions of the self through luxury products. Wealthier luxury market consumers are motivated by emotions associated with a brand’s core reason for being, perceived in terms of authenticity and timelessness. All of these dimensions create perceptions of luxury in the mind of the consumer.
https://www.psychologytoday.com/us/blog/inside-the-consumer-mind/201610/the-emotions-luxury
Article: The Psychology Behind Why People Buy Luxury Goods
From Investopedia - Online
By VANESSA PAGE Updated April 19, 2025
Reviewed by EBONY HOWARD
Fact-checked by TIMOTHY LI
Fact-checked by Timothy Li Full Bio
Timothy Li is a consultant, accountant, and finance manager with an MBA from USC and over 15 years of corporate finance experience. Timothy has helped provide CEOs and CFOs with deep-dive analytics, providing beautiful stories behind the numbers, graphs, and financial models.
A luxury good is a non-essential product. Examples include clothing from high-end designers, designer luggage and handbags, jewelry and watches, high-end vehicles, over-the-top vacations and real estate, and certain services, such as a live-in nanny.
The appeal of luxury goods is undeniable, but the price tag can be off-putting. Buying these goods can be cost-prohibitive unless you have a job with a high salary or a willingness to go into credit card debt. So why do people make these extravagant purchases?
Irrationality
Consumers aren't always rational. According to some modern behavioral psychology studies, many consumers who buy luxury goods aren't in a financial position to afford luxury goods. The proof may be in the high rates of consumer debt in America. Total credit card debt in the U.S. reached $1.21 trillion in December 2024.
A high-quality, durable handbag can be purchased for around $100, but some consumers opt to spend thousands of dollars on a luxury brand handbag that performs the same function and is of the same relative quality.
Equating Higher Price With Higher Quality
One possible explanation is the human tendency to overemphasize the positive elements of a product and ignore its disadvantages. Great marketing and brand power may contribute to this.
Some consumers will wait overnight to grab new releases of iPhones, iPads, and Mac computers even though Apple (AAPL) products aren't necessarily technologically unique or superior. According to some experts, Samsung and other brands offer more bang for a consumer's buck when it comes to smartphones, compared to Apple.
A Desire to Boost Self-Esteem
Self-esteem can be a factor, as well. This may be especially true if you can't easily afford the cost of these items. Whether it's basketball shoes or a polo, a luxury good can go a long way toward increasing self-esteem for some people, providing a sense of belonging and higher status.
A $500 scarf is just a click away with the rise of online shopping, and luxury goods can serve as the ultimate retail therapy for some people. The Internet makes it all easily accessible for impulse buying, aided by credit and a "buy now, pay later" feature on the checkout page that allows you to split the purchase into a handful of equal payments.
A sense of accomplishment is another reason why some people buy luxury goods. They want to reward themselves for their hard work by treating themselves to something they might not be able to afford.
Authenticity Matters
Someone may decide to pass up a fake Rolex and pay full price for an authentic one even if the two watches look identical. Why? The owner will know that they don't have a real luxury good, even though it may appear the same to a stranger. But why wouldn't a facsimile do the trick if we buy luxury goods to show off to others and feel like we belong?
Researchers at Yale University have determined that this quest for authenticity develops early in childhood. A study that tried to convince children that a cloning machine produced their favorite toy found that most children refused to accept the duplicate as identical. The sentimentality of the item and the memory or feeling that comes from having purchased a genuine luxury good is part of the reason that we seek authenticity.
Explain Like I'm Five
People buy expensive things they can't afford because it makes them feel a certain way. It might boost their self-esteem, or make them feel like they belong.
How Big Is the Luxury Goods Market?
Demand for luxury goods typically rises when incomes do. People tend to loosen their purse strings and spend more on items they don't necessarily need when the economy flourishes.
Research indicates that people have begun cutting back on non-essential spending across the U.S. and Europe, even though demand for these goods is still high.5
The luxury goods market in 2024 was estimated at $266.6 billion. This number is expected to increase to $369.8 billion by 2030. Almost a third of this, $115.4 billion, is expected to come from luxury apparel alone.6
What Are the Most Common Luxury Goods that People Purchase?
Some of the most common types of luxury goods include high-end designer apparel, handbags, jewelry, watches, and luxury cars. Apparel is so popular that this segment is expected to make up about one-third of the luxury goods market by 2030.
How Can I Spot a Fake Luxury Good?
Counterfeit goods are more common than you might think, especially when it comes to the luxury goods market. One of the most obvious ways to spot a fake is by the price. Be cautious if someone sells you a designer handbag for $100 when it normally retails for $3,000. You can also tell a knock-off from the real thing by the craftsmanship. Counterfeit luxury items may be shoddily made. Counterfeiters also use fake logos or alternate spellings of brand names.
The Bottom Line
People buy luxury goods for a variety of reasons. Nearly all of them are related to the strong emotions we attach to the purchase of expensive material goods. You may decide to purchase an item to achieve a certain feeling, regardless of whether you're in a financial position that allows you to do so. You might be looking for a feeling of accomplishment from hard work or to gain acceptance from others.
So be careful when you're considering a luxury purchase. Is it actually what you want, long-term—even when the credit card bill comes due? If you can truly afford it, and you go in with your eyes open, then go ahead. Buy it. But if you suspect you or a loved one may be buying luxury goods for the wrong reasons, tread carefully. Buy with both your head and your heart—not one or the other.
Some people come to the conclusion that higher-priced goods are simply superior. They may believe that you get what you pay for, regardless of whether the goods are better than their more affordable counterparts.
Key Takeaways
Buying luxury goods can create a financial burden (unless, of course, you can afford to pay for them).
The luxury goods market is worth billions and is growing, though research indicates that people are cutting back on non-essential spending across the U.S. and Europe.
People buy luxury goods despite not being able to afford them for several reasons, including a sense of irrationality, a belief that a higher price equals higher quality, a desire for higher self-esteem, and a desire for a sense of accomplishment.
Resources
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References
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
Federal Reserve Bank of New York. "Household Debt and Credit Report."
Android Authority. "Apple vs Samsung: The Ultimate Head-to-Head."
Luxury Academy. "The Psychology Behind Luxury."
Yale University. "Children Prefer Certain Individuals Over Perfect Duplicates," Page 461.
J.P. Morgan. "What's Next for the Luxury Market?"
Research and Markets. "Luxury Goods: Global Strategic Business Report."
