Why Are We Spending Money on Weird Plushies: The Economics and Psychology Behind Labubus

Photo Credit: npr.org

Introduction & Conclusion written by Michelle Yu 

Psychology Paragraphs written by Michelle Yu 

Economics/Business Paragraphs written by An Le & Shreyal Bhagwat

Edited by Shreyal Bhagwat

Imagine, if you will, you’re scrolling on TikTok, and finding this weird looking, furry plushie with wide eyes and a smile from cheek to cheek. It looks pretty weird, right? I agree, yet this “weird” toy managed to sell $670 million just in the span of 6 months. Not only that, but what once was such a bizarre toy is now your most recent purchase even though this keychain is over 20 dollars! Let me tell you, you’re not alone in this change of heart. While this trend might feel almost unreal, psychology and economics help explain exactly how we got here.

From Ew to Aww: The Psychology Behind Labubus

The Mere Exposure Effect

You know when you hear a really annoying song on TikTok or Instagram and despite hating it you start humming the song every few minutes? That’s exactly what happened with Labubus. We can blame this annoying occurrence on the mere exposure effect. The mere exposure effect suggests that we tend to like something not necessarily because we like it, but because we see it so much that they become familiar. One of the ways that this works is the idea of perceptual fluency: with repeated stimuli (here it’s Labubus), your brain takes less energy over time to process that stimuli. Our brains are wired to conserve effort, so they can’t always tell whether we like Labubus because it’s easy to process or because we genuinely like it. We usually just end up blending the two together and come to the conclusion that we want a Labubu. This familiarity also reduces uncertainty, which is another reason Labubus grow on us. The more we see them, the less is left to the imagination. We know how weird they look, but we also know so much about them. Our brains like predictability, and Labubus always have similar designs and patterns, which makes them feel familiar. Over time, this repeated exposure can make us more comfortable with them and eventually lead us to buy one, joining a trend that once seemed completely insane.

Anthropomorphism

Do you remember when you were a kid and you talked to your stuffed animal, even though you knew you weren’t going to get a response back? Or when you talk to your pet in english and expect it to understand you like you’re talking to a friend? That’s anthropomorphism in action (big word, I know!). Anthropomorphism is the act of connecting human traits to nonhuman things. It’s kind of like personification in figurative language, except it’s a little more literal. Why do we do this though? Well, by engaging in anthropomorphism, we make sense of things that don’t behave like us by giving them familiar, human-like traits. This helps us predict how they might “act” and feel more connected to them, even if they are just objects. In the case of the “mischievous” Labubus, we often call it “cute” or “sassy,” even though it’s just a keychain or figurine. With its big, wide eyes and teeth, this strange-looking creature shows human-like traits, which makes us feel an emotional attachment and ultimately fall in love with Labubus.

The Labubu Effect

Yes, this trend is so popular it even has its own effect named after it. The Labubu effect, also known as the “ugly-cute” effect, describes the state of when something is so ugly, it’s almost cute. Sounds contradictory, right? I mean how can something that looks off-putting be so adorable? Surprisingly, it all comes down to the subconscious. Our brains are wired to find charm in imperfection, even when it doesn’t fit conventional standards. For example, a Labubus with mismatched eyes or a goofy grin might seem strange at first, but those quirks are exactly what make it endearing. Because of this, Labubus do more than just entertain; they also carry a deeper message. In a world that often celebrates perfectionism, they remind us that traits society labels as “flaws,” the ones that cause so much insecurity, are an essential part of who we are.

The Economics of Labubus: A billion-dollar Business of Manufactured Hyperfixation

The Collectibles Mindset: Emotional Assets & Pleasure Premium

It blows my mind to know that someone in their right mind would splurge money on a plush toy that’s more likely to crash in value than appreciate over time. A life-sized Labubu was sold for around $172,800 at a dedicated Labubu auction in Beijing in June 2025 (that’s about the cost of most people’s cars!). Unlike traditional investments, Labubus are unlikely to increase in value because they are mass-produced collectibles and trends can fade quickly. Yet it makes perfect sense when viewed through behavioral economics. Labubus can be considered emotional assets, a type of collectible whose value comes not from financial returns like stocks or bonds, but from the feelings they provide. These include the thrill of the hunt, the pride of ownership and status (especially if you own a rare item), and the sense of belonging to a community or trend. This is what’s often called the “pleasure premium” — collectors are willing to pay far beyond an item’s expected resale value because of the emotional satisfaction it brings. In other words, ordinary consumers and bidders consistently overpay for Labubus not because of traditional financial logic, but because owning a Labubu provides joy, pride, and social connection.

How Scarcity, Spectacle, and Incentives Drive Labubu Collectors 

Pop Mart, the Chinese toy company behind the Labubu craze, has built a clever system that keeps collectors hooked using Scarcity, Spectacle, and Surprise. Scarcity is the idea that there are never enough resources to satisfy everyone. When something is rare, suddenly everyone wants it. Pop Mart creates this by only selling a small number of Labubus at a time. These toys sell out in minutes, collectors line up for hours, and some even travel across the country just to get one. This is supply and demand in action. When there are fewer toys than people who want them, desire and sometimes prices go way up. Spectacle is the excitement of seeing something extraordinary and being part of it. For Labubus, this comes from the resale market where rare figures sell for ten to twenty times their original price. A $22 blind box is no longer just a toy. It becomes a ticket to status, bragging rights, and even a little bit of fame. Pop Mart keeps the excitement alive with incentives (things that motivate people to take action). Every new release, like “Labubu Big into Energy” or “The Monsters Pin for Love Series,” gives collectors a fresh “first” to chase and a reason to keep coming back. By combining scarcity to make us crave them, spectacle to show their value, and incentives to keep us engaged, Pop Mart has created a cycle that fuels obsession, drives demand, and turns Labubus into more than just toys. They are a cultural phenomenon and a playful lesson in how economics actually works.

The Tipping Point: Utility & the Snob Effect

The Labubu micro-economy is a spectacular engine, but all engines face friction. The very strategies that propelled its rapid rise also contain the seeds of potential decline. The central question is whether this is a sustainable cultural icon like Hello Kitty or Mickey Mouse in the making, or a speculative bubble waiting to pop. Economists call this moment a tipping point, the point where a trend either becomes a long-lasting cultural icon or collapses like a passing craze. Right now, Labubu is bringing huge satisfaction to its collectors. The quirky designs, the thrill of owning one before anyone else, and seeing celebrities show them off made buying one feel special. That enjoyment or happiness you get from owning a Labubu is called utility. But here is the tricky part. When too many people have one, Labubu risks turning into a fad, a short-lived craze that everyone rushes to join but quickly abandons. That is where the snob effect comes in stating that the more common something becomes, the less exclusive and special it feels. Pop Mart keeps trying to keep things exciting with new series, but with design fatigue, government crackdowns, and knock-offs like Lafufu’s spreading, Labubu is at a crossroads. Will it become the next Hello Kitty or just another fad that everyone forgets?

Conclusion

For some, Labubus might just be another trend or fad that fades in a few months. But despite their small size and sometimes unsettling appearance, Labubus have made a huge impact. Going from a niche collectible to a nearly billion-dollar phenomenon did not happen by accident. It is the result of a mix of psychological tricks and economic strategies that shape our desires and behavior. Every time we buy one of these “sassy” toys, we are not just buying a figure, we are buying the feelings, connection, and status that come with it. Labubus are more than just wide-eyed, furry keychains. They are a reminder of how powerful our minds are in shaping our choices and how markets skillfully tap into that power.