Thorstein Veblen was an American economist, who taught at Chicago, Stanford, and Missouri before accepting a position in Woodrow Wilson’s administration as part of a group aiming to peacefully resolve the First World War, and later helped to found The New School. Veblen is notable for being a non-Marxist anti-capitalist, who espoused the idea that engineers rather than production workers would push the development of post-capitalist economic systems; and for coining the term “conspicuous consumption” in his 1899 book, The Theory of the Leisure Class.
A Veblen good is a high-cost good with an inverted demand curve: most goods in an economy have an inverse relationship between their prices and the quantity demanded in the marketplace, but cetain mitigating factors can cause the demand to go up as price increases at certain price levels. Veblen goods have this inverted curve because the ability to spend the money to acquire extremely costly goods is a social signal of status. These are the goods associated with the top end of the luxury market: e.g. designer clothing and handbags, luxury cars and sports hypercars, rare wines and artwork, and mansions. The ownership of these items allows for displaying wealth which would otherwise be hidden away in bank accounts and investments (the “conspicuous consumption” previously mentioned), but more importantly, the high prices cause a perception of exclusivity. Few people can afford these things, so owning one or more of them puts the owner in the class of elites.