The word 'swag' has a colorful but obscure etymological journey. It first appeared in the early 18th century as a slang term in the criminal underworld, likely of Scandinavian origin, possibly related to the Norwegian dialect word 'svagga' meaning 'to sway unsteadily' or 'to rock'. This sense of loose, swaying motion provides a logical bridge to its later meanings. By the 19th century, it evolved to describe the swaying motion of a sack of stolen goods carried over the shoulder, and then to the loot itself. The decorative sense, referring to a draped garland or fabric, emerged in the late 19th century, directly from the visual concept of something hanging loosely and swaying. The modern informal sense of stylish confidence is a 21st-century development, influenced by hip-hop culture, extending the idea of carrying oneself with the conspicuous ease of someone adorned with valuable 'swag' (loot).

The word 'swag' is a simplex word of uncertain origin, likely entering English as a slang or cant term. It is not productively formed from separable, meaning-bearing morphemes in modern English.