As the economic crisis turns into a recession, luxury companies are showing signs that they’re being affected negatively. According to this New York Times article, Marc Jacobs has cancelled his lavish annual holiday party, Mastercard SpendPulse estimates that luxury spending dropped 20.1% in October, magazines are reporting cutbacks, and luxury companies (including Graff Diamonds and Brioni) are purchasing fewer advertising page.

Surely these budget cuts and delays in marketing plans are a worry for luxury companies. But a greater worry is that the credit crunch will change peoples habits and make them less willing to spend on the very best. Wealthy people may no longer think it’s appropriate to wear $280,000 earrings to events while so many others are losing their jobs. Will the recession force conspicous consumption to end and make people stop buying luxury products all together?

I’m hopeful that the answer is no: if people stay true to themselves and they way that they interpret luxury, they’ll continue to buy what gives them the most pleasure. Thetas will find perfect things for affiliation, and Lambdas will find things that make them feel truly exceptional. Economic conditions may make the luxury buyer’s budget smaller, but if he or she is buying something (like a diamond) that represents love in a relationship, such affection won’t be suppressed by difficult economic times.