As of 2004, there were nearly 9 million U.S. households with investable assets of $1 million or more, not counting their homes and tax-advantaged retirement accounts. Another 48 million households earn between $50,000 and $150,000 — enough money to afford some highly visible luxury items, such as Hermes scarves or Gucci handbags.
One area where consumption is especially conspicuous is in the real estate market. The Washington Post1 reports that the square footage of the average American home has grown from 1,660 in 1973, to 1,905 in 1987, to 2,433 last year — an increase of 50 percent in just over three decades.
The amenities once reserved for millionaires are now mainstream features of high-end middle class homes being built on blue-collar blocks. Steam showers, Jacuzzi tubs, granite counters, and stainless steel appliances are now standard features in many homes selling for less than $500,000 in some areas.
For the truly affluent, however, the fact that many people can now afford a luxury item means that it has lost its exclusivity; if anyone can buy it, it doesn’t set the billionaire apart from the person who makes $100,000. For that purpose, only truly opulent purchases will do. Consider some of the offerings described in recent issues of the duPont Registry,2 which is targeted at high-net-worth individuals:
- A Patek Phillippe watch, priced at $1.2 million
- A Bugatti Veyron luxury sports car, for $2.4 million
- Your own golf resort in the Caribbean, for $62 million
As the publisher of the duPont Registry, Tom duPont, told the Associated Press, the wealthiest people’s urge to splurge on themselves is based on a simple philosophy: “You are what you are surrounded by.”3
In the 20th century, the surroundings that signified quality and prestige to wealthy Americans were Rolex watches, Rolls Royce cars, mink coats, Dom Perignon champagne, Beluga caviar, and Prada handbags.
Today, two of the more coveted symbols of conspicuous consumption, according to a Reuters4 report, are:
- A platinum cell phone from Vertu, a division of Nokia, which sells for $30,000.
- A custom-designed Maybach car, from DaimlerChrysler, priced at just...
