Why are something considered luxury/tasteful/elegant but does not perform as well?

Because more man-hours were put into their construction and design which leads to a higher price which creates exclusivity which is the entire basis of luxury. 

Finely made items have a certain feel to them.

Magazine advertisements impart intangible properties, and urban mythology reinforces that.

So.. when you have that thing in your posession it may take awhile to push away the pre-conceptions and realize what you really have. Could be an expensive kludge or a treasure you want to keep forever.

For me, digital watches just seem 'colder' than mechanical watches. I only have 2 digital watches in my entire collection, and one is a Hello Kitty watch I had to get as a joke from McDonalds. Personally, I like the way I can sit there and watch the mechanical movement in a mechanical watch do its thing and watches the springs and gears move, and some, like the Omega Speedmaster have a history that I am willing to pay a little more for. In some cases, they are even the culmination of dreams. I know my Dad has loved watches since he was given his first one, but he always bought Citizen and Seiko watches knowing he could buy them without breaking the watch. I knew he always wanted a luxury watch but would never buy one himself, so for his 50th B-day last year, my mother and I purchased a Submariner for him. Sure he could satisfy his need to know the time with a $10 digital, but this is what he wanted because it appeals to him. Same reason my sister and I bought my parents an authentic Cuckoo Clock for their 25th Anniversary. Sure you could buy a $20 plastic clock with a prerecorded 'Cuckoo Bird', but you're missing out on the work and effort that someone else put in to make the 'luxury' item what it is.

Quote:

Originally Posted by Ra97oR 

...For example, something simple as an electrical wristwatch vs. an analogue wristwatch. Where the electrical wristwatch will likely to have a host of function, better time keeping ability, easier to read the time (arguable), is often considered inferior to their less capable counterparts...

Back in the day, mass-manufactured stuff couldn't hold a coin to high-quality, precision-made gear. Now, however, everyone and their dog can make quality equipment cheap and in quantity.  However, the more exclusive stuff can feel nicer to be using and still, sometimes, is much better.

Blondes

Quote:

Originally Posted by Kirosia 

Blondes

Hey, what's wrong with blondes? :)

But seriously, that really depends on where each person is coming from, and if a certain fenotype is common or not to said area.

To put it bluntly, aesthetics.

Sometimes I'd agree with you, but there's no denying how beautiful finished hardwood can look, or how nice a metal analog watch looks.  I used to use a digital watch all the time, gshock that took a beating and now is like 9 yrs old and a battery or two later is still running fine (fast actually).  Just a year or two ago I got a metal analog watch for my birthday.  Nothing ultra expensive made of pure gold type of stuff.  Heck, it's a timex, but it looks really good to me (better than any other timex watch I've seen).  I kind of dislike the LCDs used in digital watches.  The black letters on greyish background.  It looks kind of cheap I guess.  Besides, now I rarely actually read the time to myself, I just glance at the watch and observe where the minute hand is.  Instead of thinking 6:37pm, I'd just see where the minute hand is and see a little less than a half hour till 7 without even thinking about it (if that makes any sense).  Just the metal hands and the clean looking face look much better than the clear plastic-y LCD look.

I still use my digital watch and I still like digital watches, I've just gotten used to the analog one.  Plus, I don't need to look like any more of a nerd than I already do .

Quote:

Originally Posted by Uncle Erik 

I won't argue about watches. You can get great accuracy from quartz or digital. But the old analog watches have a certain elegance. They don't have to be expensive, either. One favorite is a handwound Zenith that I picked up for $200 or so. Quite accurate and it has a minimalist cream dial with gold markers and hands. Simple and to-the-point. Most modern watches are blinged out and have tons of features I'd never use. If there was a dead-simple, understated, watch, I'd consider it.

Though you're absolutely wrong about fountain pens. I'm not crazy about modern ones - a lot of them are designed as jewelry, not function. My daily carry is an old Parker 51 I picked up for $35. I spend about $12 a year on ink. It has been halfway around the world with me. Never leaks (even on airplanes) and is the best writer of anything I've tried. I've got a bunch of other fountains and have tried everything else on the market. The 51 is better.

As for chipboard and other substitutes for real wood, you're not considering everything. Artificial boards have poor dimensional stability. They just don't hold up the way solid wood does. MDF and others collapse when they get wet, too. I pay the price for real wood. Though aluminum, iron and steel are viable options, too.

One area where "luxury" is a myth is with luxury cars. A whole lot of them are garbage, with lots of features that break down and cost a fortune to repair. The economy segment is where value lies. For $15k-$20k you can get a dependable car that'll hold up for years.

I took a introductory automotive class at college a while back.  I remember my teacher said that when the car companies, for example toyota, have some new device they've developed and want to use, they start by putting it in the higher end cars (lexus) so that if something goes wrong they don't have to fix as many as if they installed the same thing in every corolla out there.  That doesn't mean that all the 'bells and whistles' cost a ton, sometimes they're actually not that much extra.  To a small extent you're essentially being the guinea pig.

Socioeconomic status.  Cost.  Subconscious class arrogance.  A person who can buy a $10,000 Rolex has enough money they he doesn't need a watch that does everything - because he can afford individual gadgets that each fulfill a specific function, whereas a normal person is more constrained on what they can spend for the return on utility they get. 

Truly beautiful wood products take a good deal of time and skill to make, not to mention very high-quality base materials which may be extremely rare.  With the exception of hand-made wrought pieces and the like, steel and aluminum are much easier to use for bulk production - easier procurement in bulk, more uniform quality resulting in less resulted base material, better methods for mass-production.  Stainless steel is easy to get; aged walnut much less so.

Luxury cars have much more thought put into functions purely ancillary to a simple mode of transportation, and the same with true performance cars (and I don't mean a Mustang GT, here).  A ZR1 Corvette, a Ferrari F430, and a Zonda roadster all get a person from place to place the exact same as a 1987 Honda Civic - but it's everything else they do that the Civic can't that gives them their high price tag and sought-after status.