Philosophers like to begin by defining their terms, but the definition of “luxury
goods” is somewhat elusive. Of course, a typical economics textbook definition
reads something like the following: X is a luxury good if and only if it has high
income elasticity of demand. In other words, a luxury good is a good such that the
rate at which one demands this good rises faster than the rate at which one’s income
increases (Mankiw 90). But Hume’s remark that “Luxury is a word of uncertain
signification,” seems a wiser response, so I will not attempt to define “luxury
goods” in this paper. In lieu of a definition, I will simply say that I use the
expression to denote those goods that tend to cluster at the far end of this spectrum.
Examples include (but are not limited to) tourbillon watches, Bentley Mulsannes,
bespoke suits from shops on London’s Savile Road, high-end jewelry, penthouse
apartments along New York’s Central Park, mansions, yachts, and works of fine
art by masters of the craft.
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