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There are many aspects to the psychology of luxury: Dan Ariely

Professor of Psychology and Behavioral Economics at Duke University Dan Ariely says there are many aspects to the psychology of luxury.
Dan Ariely        Print Edition: Sep 1, 2013

There are many aspects to the psychology of luxury. But for me, one of the most interesting lessons relating to it came after I gave a lecture at Harper's Bazaar, the women's magazine. I spoke to a group of very nice people who were deep into the fashion world, which was completely new and foreign to me. At the end of my talk, Valerie Salembier, the publisher of the magazine at that time, came to me, thanked me and gave me a big Prada bag.

The conference was over, and I was walking around in New York city with this big Prada bag. I kept thinking to myself, what should I do with the Prada sign? Should I have it facing out to the world, to signal to people that I have a Prada bag? Or should I turn it around?

The logo would face my thigh, and I would be the only one knowing I was wearing a Prada bag. I decided to turn it around and have it against my leg, and kept walking. To my amazement, I was feeling differently. I felt I was wearing Prada. I'm not a high fashion-minded person, or at least I didn't think of myself as one. But nevertheless, I felt different.

So I started thinking, what would happen if I was wearing other things that nobody would know? What would happen if I was wearing Ferrari underwear? Would I feel somehow more energetic? And it struck me that maybe, there is an interesting distinction in luxury, which has to do with what you call 'external and internal signalling'. External signalling is what we all know - it is what we communicate to other people through what we wear. We all know, for example, how to rank order cars in terms of luxury - maybe Ferrari, Porsche, Mercedes, Audi, BMW, Toyota and so on. And when people drive particular cars, they signal to others what their taste is, who they are and what they can afford.

This is similar to the tail of the peacock, which communicates what the peacock is capable of. That is an important, but only one version of signalling. But another version perhaps is internal signalling.

Perhaps when we wear something, even if nobody else knows, we say something to ourselves that makes us feel differently about who we are. So maybe if we drink a luxurious brand of coffee or wear a particularly fancy piece of underwear, or have a particular watch or bracelet that nobody knows anything about, it makes us feel that we are different. And maybe we should think about signalling as fulfilling both those functions - what we tell the world about who we are, and what we tell ourselves about who we are. And we need to understand both those aspects, if we ever want to understand the true and interesting complexity of luxury.

The author is Professor of Psychology and Behavioral Economics at Duke University, founder of the Centre for Advanced Hindsight, and author of Predictably Irrational and The Upside of Irrationality

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