Despite the global economic crisis, sales of luxury goods are surging worldwide. Why? While marketing has contributed to the rise, the luxury market’s robust growth is actually rooted in biology.
Discussions about the structure of human thought have long been dominated by the Enlightenment view that reality is composed of four elements: space, time, matter and energy. However, recently a fifth element, information, has entered the debate. And information, it turns out, is crucial to understanding the fundamental drivers of luxury goods consumption, and thus to predicting the luxury market’s future.
Living organisms communicate, and the information that they exchange shapes their reality. While animals use colorful displays and complicated behaviors to signal fitness and strength, humans use luxury goods to demonstrate economic health.
However, more than a symbol, buying luxury goods could indicate future success, owing to the selective advantage that showing off provides. In nature, competitors perform, and the most compelling and beautiful spectacle wins.
For most animals, males are the performers. Male birds, for example, often have brightly colored plumage or intricate appendages, such as the Australian lyrebird’s long tail.
As a result, competitive displays have been interpreted as a way to demonstrate fitness to a potential mate. A bird that survives, despite inconvenient plumage that slows it down or makes it visible to predators, must be fit, and will likely sire a healthy progeny.
Given that females bear the physical burden of having offspring, an unobtrusive appearance is more advantageous — and thus more common — in nature. However, humans are social creatures with no natural predators, so female competition is more widespread — and demonstrative performance and display are more likely. Indeed, while visual manifestations of wealth are prevalent for both genders, women’s appearance is frequently more vivid (and more closely scrutinized).
However, effective display is costly. Developing complex, vibrant plumage demands significant energy and genetic resources. Genes are difficult to maintain, requiring subtle and energy-intensive correcting processes. Just as writing too fast can cause typographical errors that garble a text, rapid changes to the genome can undermine a species’ integrity.
Likewise, purchasing luxury goods requires substantial financial resources. This cost dictates the display’s competitive impact. In today’s information-based world, selection is effective only if a striking appearance is obtained at a very high price — and that price is known.
For example, those who use cosmetics known to be expensive, often seem healthier, more vibrant and more attractive than those who do not. This is not the result of efficiency (the most effective cosmetics frequently become pharmaceutical drugs). Rather, it signals a lifestyle that values the preservation of beauty and youth. Cosmetics, like all luxury products, gain influence not from their production, or even their purchase, but from their visibility.
Indeed, an expensive item with no label or identifying characteristics has less competitive impact than a recognized item or brand. For luxury goods to have any function, society needs information about their cost. This has been true to varying degrees throughout history — sometimes resulting in price bubbles.
False information, such as counterfeit goods, jeopardizes the competition-based selection process. Animals commonly use mimicry to capitalize on knowledge — or fear — of another’s strength. By imitating an animal with a well-known protective profile, a weaker one may enjoy selective benefits without the costs.
However, mimicry’s success in nature depends on the ratio of the original to the ersatz. If there are too few of the original, the profile loses its significance, and its protective value vanishes.
Similarly, nobody would display a symbol of wealth if it were too common. Therefore, assessing whether luxury goods will maintain their impact, and thus their appeal, requires monitoring the extent of counterfeiting.
Given that luxury goods provide individuals with a competitive advantage, higher luxury goods sales could indicate a brighter economic future for a country. In a time of crisis, countries in which luxury goods play their selective role effectively are the safest bets for productive investment.
Antoine Danchin is an honorary professor at the Faculty of Medicine of the University of Hong Kong and president of AMAbiotics SAS.
Copyright: Project Syndicate/Institute for Human Sciences