Is the wastage of luxury goods good for an economy?

[sunny88]

It is pretty clear that when we waste some essential items, it harms the economy. In this case the poor people are the most effected.

But when we waste luxury goods, does it benefit in any way the overall society (poor and rich included) in economic terms. '

 

This may cause redistribution of wealth in certain terms and it may lead to psychological distress to the class of people who could afford it earlier, but due to wastage it might not be available to them now.

 

But is the overall economy going to benefit from it, if the producers are of those luxury goods are poor/rich.

 

 

 

 

P.S - I am new to this forum, I am not sure if I have posted the question in the right place. If not, please advise accordingly. Thanks.

[qeducation111111]

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