Last night Imperial College Business School hosted a discussion about luxury, linked to the V&A's What is Luxury' exhibition.

Professor Jonathan Haskel, a leading economist and panellist at last night's discussion, gave us his view.

What does the term luxury mean today?

When we talk about luxury, most people think of “value” -  expensive goods such as designer handbags and jewellery or exclusive experiences that only a few can afford, such as exotic holidays or fine dining. However, to an economist, luxury isn’t measured by value. Instead it’s the scarcity of an item that defines its value in terms of cost to consumers. For example, water is essential for life, but diamonds are inessential. Diamonds are scarce and if water is also scarce, both will have high costs to consumers.

How have our ideas of luxury changed over time?

Our ideas about luxury have evolved throughout history and are largely shaped by notions of scarcity and price as well as social status and desirability. For instance, in Biblical times, books were considered a luxury due to their scarcity, but are now commonplace in most parts of the world. Over the last century, a technological revolution has brought us televisions, computers, mobile phones and ipads. These items, once considered a luxury due to their high price and limited availability, are now so readily available and affordable that they cease to be a luxury and become more of a necessity. Meanwhile, owning your own home, which was once an attainable goal for most people, has been transformed into a luxury.

Is the traditional definition of luxury still relevant in a digital age?

In our fast, technology-driven age, time is precious as we navigate the high volumes of information coming at us from news outlets and social media platforms, all available at the touch of a screen or keyboard. If time is our greatest luxury, then technology must compete for people’s time and attention span.

How is innovation driving luxury?

As a general rule, innovation drives down the prices of goods as they become more commonplace, so you could argue that innovation benefits society by driving out luxury. However, some innovation is responsible for creating luxury, for example in the production of expensive goods such as a Ferrari car or Mulberry handbag.  But there are some items, such as housing and the concept of time that aren’t driven by innovation at all, but can still count as luxuries.

What are your predictions for the future of the luxury sector?

In pure economic terms, it’s hard to predict which items will become a luxury in the future, but  a safe prediction would be housing. However, the V&A’s exhibition raises many other social and cultural issues which imply that in future almost anything could become a luxury.

Jonathan Haskel, Professor of Economics was a panellist at ‘An Open Discussion on the Experience of Luxury’, a panel discussion in partnership with the Victoria and Albert Museum.