Sellers have long charged a premium for objects that confer some kind of social status, even if they offer few, if any, functional benefits over cheaper products. Designer sunglasses, $200,000 Swiss watches, and many high-end cars often seem to fall into this category. If a marketer can make a mundane item seem like a status symbol—maybe by wrapping it in a fancy package or associating it with wealth, success or beauty—they can charge more for it.

Although this practice may seem like a way to trick consumers out of their hard-earned cash, studies show that people do reap real psychological benefits from the purchase of high status items. Still, some people may gain more than others do, and studies also suggest that buying fancy stuff for yourself is unlikely to be the best way to boost your happiness or self-esteem.

In 2008, two research teams demonstrated that people process social values in the brain’s reward center: the striatum, which also responds to monetary gains. That these two values share a cerebral home suggests we may weigh our reputation in cash terms. Whether we like it or not, attaching a monetary value to social status makes good scientific sense.

Much of what revs up this reward center—food and recreational drugs, for example—is associated with a temporary rush of pleasure or good feeling, rather than long-lasting satisfaction. But when we literally pay for that good feeling, by buying a high-status car or watch, say, the effect may last long enough to unleash profitable behaviors. In a study published last year, researchers at National Sun Yat-Sen University in Taiwan found that the mere use of brand name products seemed to make people feel they deserved higher salaries, in one case, and in the other, would be more attractive to a potential date, reports Roger Dooley in his Neuromarketing blog. Thus, even if the boost of good feeling—and self-worth—is short-lived, it might spawn actions that yield lasting benefits.

Other data suggest that owning fancy things might have more direct psychological benefits. In a study published in 2010, psychologist Ed Deiner at the University of Illinois and his colleagues found that standard of living, as measured by household income and ownership of luxury goods, predicted a person’s overall satisfaction with life—although it did not seem to enhance positive emotions. (See “The Many Faces of Happiness,” by Suzann Pileggi Pawelski, Scientific American Mind, September/October 2011.) That rush of pleasure you get from the purchase probably does fade, but a type of self-esteem effect seems to last.

Still there may be some drawbacks to trying to boost your self-confidence by opening up your wallet. People who feel that they are lacking in status, power or influence are willing to pay the biggest premium for social status. The result can be discrimination—that is, disadvantaged groups end up paying more, starting a vicious cycle that brings these groups further down the social ladder (see "When You Try to Buy Status, It Can Backfire"). Still, people in these studies paid the higher prices only after being reminded of their low ranking, suggesting that trying not to shop when feeling insecure could buffer folks from this effect.

Additionally, this work seems to imply that not everyone accrues equal benefits from buying name brands. People who generally feel fine about their place in society may not get the same rush from luxury, and thus may own fewer expensive or ostentatious items than others of similar means. The asking price for status may simply be too high for some.

Yet even if you are someone who really relishes fancy wares, buying stuff for yourself is not the most effective way to increase your feelings of self-worth. A far bigger benefit can come from giving to others. The effort you make to support another person often spawns a strong friendship, which has lasting gains for self-esteem, reported psychologist Jennifer Crocker, now at The Ohio State University, last year at the convention of the Association for Psychological Science (see “Give and You Shall Receive—A Boost to Your Self-Esteem”). And in a study that came out a few years ago, scientists determined that people got the biggest boost in happiness from money when they gave it to someone else (see “Money Can Buy Happiness”).