People choose to buy counterfeit luxury goods for different reasons: Maybe they can’t say no when a bargain suddenly appears, or maybe they enjoy the thrill of fooling someone and temporarily bumping up a few social status notches.
But researchers believe there’s another reason behind the recent surge in demand for fake luxury goods: the fight against widening income inequality.
A study published by City, University of London found that as perceptions of income inequality rise, consumers are increasingly seeking fake luxury goods for their “egalitarian value” – the ability of these products to restore equality in society.
Researchers from Citi, Stockholm School of Economics and Harvard Business School surveyed 2,000 participants in the US and Sweden to explore perceptions of class structure and attitudes towards inequality, and to explore additional drivers of counterfeit purchasing.
“Egalitarian values motivate consumers to purchase counterfeit luxury goods beyond hedonic, utilitarian, economic, or status values,” the authors write.
Let them wear a handbag
France, the final resting place of Marie Antoinette, is also home to some of the world’s biggest fashion houses, including Bernard Arnault’s giant LVMH and Gucci’s parent company Kering.
Like Antoinette, these wealthy fashion houses are facing criticism from the public as inequalities come into the spotlight.
In January, LVMH-owned Benefit Cosmetics was reported to be in talks to partner with TikTok’s parent company ByteDance to combat a surge in counterfeit goods on the platform.
With the Olympics approaching, Paris police are working hard to stem a surge in counterfeit goods in the city.
The soaring cost of living has driven double-digit inflation, hit disposable incomes hard and led consumers to opt for simple luxuries, making counterfeit goods more appealing.
Since the cost of living has risen, the price incentives to buy counterfeit goods have increased, but so has inequality.
Studies have shown that poorer areas experience higher inflation and that low-income households spend more of their income on inflation-prone items such as food than their wealthier counterparts.
In retaliation, young people have begun to popularize counterfeit goods, which appears to be contributing to the loss of exclusivity for counterfeit goods.
The researchers also looked at individuals’ “social dominance orientation,” or the extent to which people support a hierarchical system in society based on things like wealth.
People who scored lower on the test, and therefore were less likely to support social hierarchy, were more likely to derive higher egalitarian values from purchasing counterfeit goods.
“This study is particularly interesting because it links rising inequality with ‘deviant’ consumption patterns such as purchasing counterfeit luxury goods, suggesting that purchasing counterfeit goods is not driven by economic reasons but rather to achieve a sense of social equality,” said Assistant Professor Wiley Wakeman of the Stockholm School of Economics.
“It also raises downstream questions about whether mechanisms that enhance brand exclusivity, such as maintaining waiting lists for luxury watches or handbags, counterintuitively articulate an egalitarian value and consumption of counterfeit goods and explain why consumers purchase these items.”
The real cost
While consumers may think, at least implicitly, that they are addressing inequality by choosing fake Prada or Dior, they may very well be doing the exact opposite.
According to the United Nations Office on Drugs and Crime, because counterfeit goods are illegal, they are produced in exploitative labor conditions.
The UN says criminals who organise counterfeit medicine production “endanger public health through their production of fake medicines, deprive the public sector of tax revenue by circumventing official channels, increase public spending through increased law enforcement activities to combat this illicit trade, and drive up prices of legitimate products as companies seek to recoup their losses”.
While it is tempting to see buying counterfeit goods as a subversive act in the fight for equality, those tempted to do so might consider the risk of getting caught and instead think of other ways to help lower the Gini coefficient.
