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Spending on pleasures rises slowly as income rises, whereas spending on essentials rises sharply. When a consumer's income rises, they are more likely to purchase more needs and spend more money on luxuries, though more slowly.

What exactly are needs and extras?

If a need is something that everyone needs, then a luxury must be something that no one genuinely needs but that many people want. But the word in the dictionary goes a little bit further. The definition of a luxury is "an inessential, desirable product that is expensive or difficult to attain."

  • An essential can be owned by virtually anybody, while a luxury can only be owned by a small number of individuals, or at the very least, very infrequently. Contrary to necessity, people buy luxuries in addition to their inherent brilliance to reaffirm and demonstrate their social and economic standing.

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