Veblen Effect
Veblen Good
The counterintuitive phenomenon where demand for a luxury good rises as its price increases — because the high price itself signals status, making the item more desirable.
Origin
Named after Norwegian-American economist Thorstein Veblen, who in 1899 published The Theory of the Leisure Class and coined the term "conspicuous consumption" — the practice of buying expensive goods primarily to display wealth. Economist Harvey Leibenstein formalized the "Veblen effect" as a distinct demand anomaly in his 1950 paper "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand."
Everyday Use
A handbag that costs $5,000 isn't twenty times better than one for $250 — but it might be twenty times more desirable precisely because of the price tag. When a luxury brand raises prices and sales go up, that's the Veblen effect: the cost is the appeal.