$200 jeans? $800 sheets? Paying a premium now for image and brand cuts into our real quality of life down the road.
By MP Dunleavey
Correct me if I'm wrong, but it wasn't that long ago when the mere concept of Williams-Sonoma (or Restoration Hardware, Crate & Barrel, et. al.) would have struck most folks as . . . nutty.
Oh sure, I'll pay a premium price to buy upscale versions of ordinary stuff -- replacing functional things I already own -- because my lifestyle must reek of affluence!
Thirty years ago, people would have scoffed at such vanity. Today, inundated by high-end specialty stores in every corner of the retail market, more and more Americans are succumbing to the siren song of these so-called affordable luxuries. And at what cost?
A case of 'affluenza'.
In his book "Luxury Fever," economist Robert Frank describes the rise of this swankier-is-better mentality -- and the toll it's taking on people's financial lives.
"Although it is the mansions of the super-rich that attract attention -- homes of 15,000, 20,000, even 40,000 square feet -- the far more newsworthy fact is that the area of the average house built in the United States is now more than roughly twice what it was in the '70s," he writes.
The trappings of affluence are no longer limited to those who can afford them. Increasingly, middle-class Americans will pay top dollar just to have the veneer of luxury -- and retailers, wizards that they are, continue to provide the fantasy of wealth, even when all you're buying is a garden trowel.
The things we can't live withoutIn case you have NO idea what I'm talking about, please scroll through this list of once-ordinary goods and services that now come in versions ranging from the merely overpriced to the truly outrageous:
Pots: Now known as "cookware." Please think nothing of paying $125 for an All-Clad omelette pan. Eggs not included.
Jeans: The $200 pair of designer denims is back. Which is good, because that pair of $75 Diesels just isn't cutting it anymore.
Knives: Still called "knives," but a set of prestige Henckels can set you back up to $1,500.
Cosmetics: The switch from Vaseline Intensive Care lotions ($2.49) to skin-sensitive Neutrogena ($7.99) is a slippery slope to Kiehls ($25) -- but then why not go ahead and splurge on La Mer, which starts at $90 for a fraction of an ounce.
Strollers: There's no limit to what you can splurge on baby gear, so I'll just use this brief example: If you invested the $700 you're inclined to spend on the trendy Bugaboo stroller, your child could retire with an extra $100,000.
Sheets: Now called "linens." It's amazing that people can justify paying $800 for 1,000-threadcount Royal Crest sheets when 20 years ago no one had any idea how many threads per inch their sheets had.
Sneakers: Now called "athletic footwear," and they have us paying $150 for a pair of Air Jordans instead of $25 for a pair of Keds. But price isn't the only problem. We also expect to own several pairs for all the sports we do.
Watches: Now they're "timepieces, but it's no longer about telling the time. For about $20, you can buy a watch with a quartz movement that won't lose a minute in the next 10,000 years. But even without the optional encrustation of diamonds, you'll still fork over $7,500 and up for a Rolex President or pay a couple hundred thousand for a Cartier watch. And we're still talking about a plain-looking gold watch -- not something Liberace would have worn.
Chocolates: It was the humble Hershey Bar that won WWII. Then along came Godiva at $16 a pound. But why not spend $84 a pound on Debauve & Gallais chocolates with (note all the place-specific names that make ordinary ingredients sound exotic) Piedmont hazelnuts, Turkish grapes, Bourbon Island vanilla and West Indies rum as ingredients. Now, try saying that list of ingredients without the place names and see if you still want to cough up $84.
Scotch: I can remember when people used to get excited about a bottle of Johnnie Walker Black, which will set you back about $50 these days. How could we have been so pedestrian? Now, nothing less than 30-year-old single malt will do. Price tag: $250 and up.
Bathrobes: You can get a nice flannel for about $50, or one made from Egyptian cotton (what's wrong with Texas cotton, anyway?) for $250. But really, the one we're all secretly lusting after is the $6,000 Daniel Hanson robe constructed (not made) with silk-trimmed pashmina. And where the hell did pashmina come from? Cashmere wasn't good enough anymore?
TV: Sure, you could spend $700 for a 36-inch conventional TV, but that's so '90s. Why not spend $5,000 for a 60-inch plasma screen? It'll only cost you a few thousand more to acquire a house with a living room big enough.
Wine glasses: Now called "wine stems," shelling out $130 for a set of six Riedel glasses is just the beginning. Now you need eight sets, each with a slightly different shape to "enhance individual grape varieties and styles of wine." And to think I used to believe that what was in my 6-for-$6 Ikea glass was all that mattered.
Many of these examples show that no matter how much you're willing to spend for a little luxury, there will always be a newer, better version out there that's beyond reach, taunting you. It's an arms race that pits the middle class against the upper-middle, who in turn are striving with the rich, who are struggling to live like the super-rich.
But it's an arms race all but the wealthiest are destined to lose. In the last five years, "the top 1% of earners have seen their wages shoot up like a rocket," says economist Chuck Collins, senior program developer at United for a Fair Economy, a research group in Boston.
Not so for the rest of us, writes Frank: "Middle- and low-income families have had to finance their higher spending by a lower rate of savings and sharply rising debt.
Retail therapyIf all these upscale purchases put the financial screws to the average Joe, whose dollar is already stretched, why does it continue?
It's tempting to buy into the "quality is worth paying for" rationale some would have you believe. But often the difference in quality is all but undetectable. Can your body really tell the difference between 300 and 1,000 threads per inch? We like to think of ourselves as connoisseurs, but how many people can really taste the difference between 30- and 40-year-old scotch?
Sometimes, the difference in quality is real, but the price you have to pay for it far exceeds whatever you might gain in durability, usefulness or design. A silk-trimmed pashmina bathrobe can be a beautiful thing, but $6,000? Please!
In reality, many of us use these splurges, affordable or not, to make ourselves feel better. Paco Underhill, a retail analyst and author of "The Call of the Mall," says acquiring various high-end lifestyle "accessories" gives a psychological lift to people "who have had to compromise on other things," he says. "They'd like to drive a Jaguar, but can't afford it, so instead they'll carry a Coach bag."
The price we pay
Sadly, this cycle of spending on image and brand tends to escalate. What was once a luxury or a one-time splurge quickly becomes a necessity. Harvard psychologist Daniel Gilbert dubbed it a pattern of "miswanting" -- because what people want (i.e. a life of wealth and luxury) can't be fulfilled just by acquiring the trappings of it.
And what's worse is that trying to buy the appearance of luxury can become a roadblock that stops you from building up your own, true wealth. Because -- as impressed as your friends are by your pricey "stems" or $700 stroller -- that's just money going toward a fantasy, instead of being invested in a way that might truly enhance your quality of life someday.
