Based on terror management theory and psychological reactance theory, this study determines the impact of powerlessness on consumers' luxury compensatory consumption and happiness and investigates the mediating role of self-esteem and moderating effect of materialism. Online survey responses collected from female consumers (N = 283; aged 20s-40s) were analyzed using structural equation modeling. The study reveals that consumer powerlessness can lead to happiness through luxury reward consumption, with self-esteem and materialism playing key roles. While the full sample and low materialists group did not show self-esteem as a mediator, the results indicate that powerlessness reduces self-esteem among high materialists, which then drives luxury compensatory consumption. Additionally, this consumption induced both groups' happiness, with greater influence observed when materialism level was high. This study provides a foundation for understanding the mechanism of luxury compensatory consumption in a threatening environment.
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