With the Monaco Grand Prix tomorrow, the principality of Monaco transforms into the most concentrated display of wealth on the planet. Superyachts worth hundreds of millions of pounds line the harbour as hotel rooms reach £5,000 per night. A Paddock Club pass which grants access to a suite overlooking a street circuit where overtaking is almost physically impossible costs upwards of £15,000. Celebrities, royalty, and the partners of drivers arrive in outfits worth more than the average annual salary, documenting everything for audiences of millions on Instagram. And the race itself, by most measures, is the least exciting of the entire Formula 1 calendar.
None of this makes sense under standard economic theory. But understood through the lens of Veblen goods, conspicuous consumption, and signalling theory, every detail becomes both rational and inevitable. F1 WAG culture is one of the purest illustrations of status economics in the modern world.
The Demand Curve
Standard economic theory rests on the law of demand: as price rises, quantity demanded falls. For example, if you raise the price of a TV, people buy fewer TVs. This downward-sloping demand curve underpins most of microeconomics and holds reliably across the vast majority of goods and markets.
However, two classes of goods exist where this relationship inverts or disappears entirely. Giffen goods are goods for which demand rises as price increases because the income effect dominates the substitution effect and is associated with staple foods like bread or potatoes among the very poor, where a price rise leaves so little income for anything else that consumption of the staple actually increases. Veblen goods are goods for which demand increases as price rises not because of income constraints but because the high price itself is the source of value and F1 WAG culture operates almost entirely in Veblen good territory.
The Theory of Conspicuous Consumption
In 1899, Norwegian-American economist Thorstein Veblen published The Theory of the Leisure Class where he observed that wealthy individuals do not simply consume more than others, but they consume visibly. He argued that the purpose of luxury spending is not utility in the conventional sense, it is signalling: the deliberate communication of social status to an audience.
Veblen identified two related mechanisms. Conspicuous consumption - the spending on goods and services primarily to display wealth rather than for intrinsic use value. And conspicuous leisure - the demonstration that one does not need to work, by being visibly idle or present at events that the working population cannot attend on a Wednesday afternoon in Monaco.
The key economic insight is that for Veblen goods, utility is derived not from the good itself but from what ownership communicates to others. A £30,000 Birkin bag and a £300 handbag serve identical functional purposes. The £29,700 difference shows a widely recognised, socially legible signal of extreme wealth. If you made the Birkin affordable, the signal would then collapse, making the product worthless to the people who valued it most.
Monaco is Veblen's theory made physical. The paddock, the yachts, the Paddock Club - none of it is primarily about motor racing, but is more about being seen at the place that everyone knows is impossible for most people to access, making the exclusivity the value.
The F1 Economy
Formula 1 is an unusual economic ecosystem as combined team revenues exceed £4 billion annually. Top driver salaries like Lewis Hamilton at Ferrari, and Max Verstappen at Red Bull reach £50–80 million per year, with Adrian Newey (an engineer) at Aston Martin receiving $150 million over 5 years. The sport's global audience has exploded following the Netflix Drive to Survive series, expanding dramatically into younger, more fashion-conscious demographics in the United States and beyond.
The sport's winner-takes-all structure concentrates wealth at the top to an extraordinary degree. The gap in prize money, sponsorship, and commercial revenue between the top and bottom of the constructor standings is vast, which means the conspicuous consumption happens at a level of intensity that most other sporting contexts simply cannot match. When the people at the top of the distribution earn £80 million per year, the spending that signals membership of that group must be calibrated accordingly.
F1 is also uniquely globalised. Twenty-four races across five continents mean that conspicuous consumption is performed for different audiences, in different cultural contexts, throughout the year. The signal is broadcasted continuously, across markets, with a social media amplification layer that Veblen could not have imagined in 1899.
WAGs as Economic Agents
The drivers' partners are sophisticated economic agents operating in what economists call the attention economy, the market for human attention that underpins social media platforms and the brand partnerships they enable.
A large, engaged social media following is a valuable economic asset in a precise sense: it can be monetised through brand partnerships, particularly in luxury fashion, beauty, and travel. F1 WAGs (wives and girlfriends) including Kelly Piquet, Alexandra Saint Mleux (now Leclerc), and now Kim Kardashian command substantial fees for this kind of content and the F1 association is central to the commercial value of their platforms.
The mechanism is one of signalling authentication. Luxury brand partnerships derive their value from the credibility of the person delivering the signal. An influencer who demonstrably lives within genuine proximity to extreme wealth like attending the Monaco Grand Prix, travelling on private jets, sitting in the Ferrari or Red Bull paddock, sends a signal that cannot be easily manufactured. The F1 context authenticates the luxury positioning in a way that aspirational content alone cannot as brands pay for the credibility of the signal, not merely the size of the audience.
The Netflix effect has amplified this dynamic considerably. Drive to Survive repositioned the sport culturally, embedding it within fashion, celebrity, and lifestyle media in a way that made F1-adjacent social media presence commercially valuable to a far wider range of luxury brands than previously. The attention economy around F1 expanded dramatically, and the partners of drivers were among its primary beneficiaries.
Signalling Theory
Economist Michael Spence is known for developing his signalling theory to explain how agents communicate unobservable qualities through observable, costly actions. A Hermès Birkin bag functions as a status signal because it is expensive, difficult to obtain, and widely recognised as both. The critical property of an effective signal is that it must be costly to fake, as a signal that is cheap to send carries no information, because anyone could send it regardless of their actual status. The high price of a Veblen good is its primary feature as a signalling device.
This is why luxury brands go to extraordinary lengths to protect scarcity. Hermès operates a waitlist system for Birkin bags under which customers must demonstrate a significant purchase history before being offered one, a deliberate mechanism for preserving the signal's exclusivity. More strikingly, luxury brands including Burberry and Richemont have been documented destroying unsold inventory rather than discounting it. Discounting would undermine the signal: a Birkin that could be bought in a sale would no longer reliably indicate extreme wealth, because people of more modest means could acquire one when prices fell, making the product would lose its value to its most important customers.
In F1, the same logic applies to Paddock Club passes, Monaco yacht berths, and harbour-front hotel suites. Their value as status signals depends entirely on their inaccessibility to most people. The moment they become affordable, they cease to function as Veblen goods and the people who valued them most immediately lose interest.
Positional Goods and the Monaco Paradox
Finally, positional goods - a concept developed by economist Fred Hirsch in his 1977 work Social Limits to Growth, are goods whose value derives entirely from their ranking relative to what others possess, rather than from any absolute quality they embody.
A Monaco Paddock Club pass is a positional good in the purest sense. Its value is not in the view of the race - which is, by universal agreement among motorsport fans, quite poor. Overtaking on the narrow street circuit is almost impossible, and much of the action is invisible from the grandstands. The value is in being among the small number of people who have one, while a much larger number of people do not.
As more people become wealthy enough to afford a given level of luxury consumption, those at the top of the distribution must escalate their spending to maintain their relative positional advantage. The benchmark for conspicuous consumption rises continuously, which is why luxury spending tends to grow faster than income at the very top of the wealth distribution. Maintaining positional superiority in a world where more people are becoming wealthy requires ever-increasing expenditure.
The Monaco paradox crystallises this perfectly. The race is widely considered the worst spectacle on the calendar. Its prestige is entirely positional, constructed from scarcity, history, and the self-reinforcing belief that attendance signals membership of an exclusive global elite. People pay £15,000 for a Paddock Club pass not despite the fact that it is a poor place to watch a race, but in some sense because of it. The impracticality of the expenditure is itself part of the signal.
The superyachts, the Birkin bags, the paddock passes, the outfits documented for millions of Instagram followers a visible, costly, globally legible signal carefully calibrated to remain inaccessible to the vast majority of people who might otherwise send it.