OF COLLECTING ASIAN CERAMICS:
as a Luxury Good
Various research has concluded that buyers of art conduct themselves in manners similar to buyers of luxury goods. Therefore, it is important to understand
the characteristics of luxury goods so we can better appreciate
What are Luxury Goods?
Luxury goods are defined by
economists as those with a high income elasticity of demand. In other words, people buy more and more of them as they get wealthier. An example
is high priced time-pieces. We might acquire our first luxury
watch only when we start to have high disposable income. As we become wealthier still, we
may buy more. Conversely, if our wealth declines we will most likely hold off spending $10K for another
Demand characteristics for necessity goods like food are very
different since people dont automatically buy more if they become wealthier
-- and they might even buy less. An example is regular
white bread. No matter how destitute we become, we still need to
eat a roughly constant number of loaves. But as we become well-to-do we might eat less of it, dining instead on organically-grown whole wheat breads costing
ten times more.
Income elasticity of demand can also change at different levels of income. Someone might collect sports cars when he is merely well-off then push them aside for private jets when he actually becomes prosperous a common scenario for some people in the Middle-East
when oil prices are high.
Whats Special About Luxury?
The accepted characterization of luxury is a good that is greatly superior to comparables. Most
product classes today have up-market categories that are differentiated into
increasing levels of quality, features, styling and so on.
In the garment industry, the Haute Couture movement of France is a better organized example of this. There are strict standards set by the French government and only a few producers are chosen for the designation. Garments need to be hand sewn and of flawless workmanship with entire teams of highly skilled
professionals involved -- seamstresses, beaders, embroiderers, dyers, fitters, finishers,
Less expensive gowns can certainly be acquired from Walmart but people who desire garments with lasting quality and styling will pay what is required for
Haute Couture names like Dior, Givenchy and Lacroix.
Some operators in various industries have created entry level luxury goods meant for customers who are new to the concept of luxury. They
exploit shrewd promotional tactics to create the perception of luxury
but without the aggravation of actually creating superior merchandise.
Surprisingly, this slap-on-a-logo-and-charge-a-ridiculous-price technique
seems to actually work to create crazes for fashion-oriented products.
Buyers tend to be innocent (and often younger) people. Due to its transitory nature, such
is not considered of consequence for experienced luxury buyers.
Many luxury products are subject to an interesting pricing phenomenon
that economists call positive price elasticity of demand. The perceived value of such goods rises as their prices increase. In other words, an attractive bottle of fragrance with a high price will be thought
by buyers to be more valuable (in terms of its positive attributes) than if it were
The demand for luxury goods is closely tied to economic prosperity. It is not surprising that Asia, the worlds fastest-growing region, is also the fastest growing market for luxury goods. Given the huge populations of countries in the region and their economic resiliency, it is felt that Asia will be the dominate market for luxury goods for
decades into the future.
It All Mean for Art?
great economic achievements culminating in the 1980's allowed it
to become the world's leading market
for luxury goods and art during that same period. In key segments like the French
Impressionists, Japanese collectors completely dominated the
market for most of the decade.
seems reasonable to expect that increasing prosperity in other
Asian countries will have a similar positive impact on demand. The
remarkable economic success of China is often noted because of its enormous
population and rich history of art appreciation.
to the Economist magazine, China has already overtaken France
and Britain as the
world's 2nd largest art market (after the US).
Apparently, the future is coming faster than many thought
Asian Ceramic Art