Some things sell better precisely because they cost more.
Normally, raise a price and people buy less. But for some luxury goods, demand goes up with the price, because the expense is the point. Economists call them Veblen goods, after the American thinker who in 1899 gave us the phrase 'conspicuous consumption'.
The law of demand says that, other things being equal, people buy less of something as it gets dearer. Veblen goods appear to break it. For certain luxuries, a higher price makes the item more desirable, producing a demand curve that slopes upwards instead of down.
The name comes from Thorstein Veblen, whose 1899 book The Theory of the Leisure Class described how people spend to display status: conspicuous consumption and conspicuous leisure, or keeping up with the Joneses. A Veblen good is often a positional good, prized because few others can have it. The economist Harvey Leibenstein formally defined the 'Veblen effect' in a 1950 paper that also described two cousins: the snob effect, where people want something because it is not what everyone else prefers, and the bandwagon effect, where they want it because it is popular.
There is a related but different idea, the belief that a low price signals poor quality, or 'you get what you pay for'. There is also a mirror image, the counter-Veblen effect, where some consumers prefer a good more as it gets cheaper, as a form of conspicuous thrift. Testing Veblen's theory is not easy, as the sociologist Colin Campbell pointed out, because people are rarely honest about buying things to impress others.
Veblen goods are not the same as Giffen goods, another famous exception to the law of demand. A Giffen good sells more when its price rises because of how the price change squeezes a poor household's budget, not because anyone likes it better for being dear. With a Veblen good, the price itself changes how much people want it. The idea has shaped luxury marketing, and critics see such spending as wasteful.
Source: Wikipedia — Veblen good · Text summarised from Wikipedia (CC BY-SA 4.0)
