Question

Economists assume we are all making the most reasonable decisions with our resources, but how do you explain people paying $40,000 for a "Hermes Birkin Bag" or $2000 for "Kanye West's Sneakers"?

Answer 1

As not everybody can afford designer items, those who can, typically buy such items to increase their self-esteem, and/or view it as an accomplishment. Also, many will do so in a way to view themselves in a higher class than others.