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I guess the answer to this question is simple; Efficiency vs equity Consumption of luxury goods is arguably efficient, because at any point, a willing consumer derives huge utility from consumption of such items. THis is usually what we refer to as conspicuous consumption. It also generates large amount of income and employment within an economy. From this viewpoint, willing buyer, willing seller, and efficient allocation. The economy will be incentivized to innovate and work for better returns in profits. Nonetheless, equity might be a concern. If economic dollar votings (the signalling forces of demand and supply) leads to over-allocation in luxury goods that result in inability to equitably produce sufficient basic goods in an economy, then it might create some inequity problems where the rich consumes luxury goods and the poor do not get access to basic necessity. Kind of like in rural parts of China. Hope this addresses your question. If you like my answer, do kindly give me a shoutout at my economics blog qeducation.sg. you can also visit for more resources and posts on my site. Cheers