A Veblen good is one where demand goes up as price goes up. The theory behind this is that these items are such powerful status symbols that the higher price, and thus greater rarity, makes them even more desirable.
Think Birkin bags. They’re just expensive bags, but they are coveted by their fans.
Veblen is named after Thorstein Veblen and he had a lot of theories:
Thorstein Veblen’s Theory of the Leisure Class—A Status Update [Rob Henderson’s Newsletter] – “This explains why status symbols are so often difficult to obtain and costly to purchase. These include goods such as delicate and restrictive clothing, like tuxedos and evening gowns, or expensive and time-consuming hobbies like golf or beagling. Such goods and leisurely activities could only be purchased or performed by those who did not live the life of a manual laborer and could spend time learning something with no practical utility.”
Why Are ETFs (Sometimes) More Tax-Efficient Than Mutual Funds? [Oblivious Investor] – “In contrast, if you or I want to sell shares of an ETF, that’s a transaction that happens on the secondary market. We aren’t transacting with the fund itself at all. We’re just selling our shares to somebody else who wants to buy them. And that means that the ETF doesn’t have to do anything — doesn’t have to sell anything, and no tax costs are incurred by remaining shareholders in the fund.”
This next one is really fun: