Giffen good

Related to Giffen good: Engel curve

Fig. 81 General equilibrium analysis. An increase in the price of oil is likely to increase the cost structures of many other industrial sectors, and hence serve to raise the general price level and related wage rates. This increase in prices and wages, in turn, increases input costs to the oil industry.

Giffen good

a GOOD for which quantity demanded increases as its PRICE increases, rather than falls, as predicted by the general theory of DEMAND. It applies only in the highly exceptional case of a good (see INFERIOR PRODUCT) that accounts for such a high proportion of households’ budgets that an increase in price produces a large negative INCOME EFFECT, which completely overcomes the normal SUBSTITUTION EFFECT. See PRICE EFFECT, UPWARD-SLOPING DEMAND CURVE.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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References in periodicals archive ?

Given the existence of inferior goods, it's possible to imagine a Giffen good. A good could be so inferior that, if the consumer's income were to fall at a time when the inferior good's price is rising, the income effect on the inferior good could fully overcome its substitution effect.

Are cigarettes a Giffen good for poor, expectant women?

However, an individual with DARA might treat insurance as a Giffen good (3) when the income effect exceeds the substitution effect.

Tax deductions for losses and equilibrium in competitive insurance markets

Let a consumer consume two goods and let Good 1 be a Giffen good. Then, Good 1 is necessarily an inferior good, and by Equation (1), Good 1 is a substitute for Good 2.

Asymmetric substitutability: theory and some applications

On the one hand, Boland's tone would lead us to conclude that he is arguing on a priori grounds against the existence of Giffen goods and feels that this is a legitimate method of argument.

The Principles of Economics: Some Lies My Teachers Told Me

Thus, Gilley and Karels [1991] claim, in essence, that the food which provides the most calories per dollar spent must be a Giffen good. In their words [p.

A difficulty in the search for Giffen behavior

First, if the consumer is subject to a single constraint, as he is in Hicksian utility theory, it is indeed true that an upward-sloping demand curve characterizes a Giffen good. But this is not so if the consumer faces two constraints, as he does in the Gilley-Karels model.

In search of Giffen behavior: comment

[8.] Hoy, Michael and Arthur Robson, "Insurance as a Giffen Good." Economics Letters, Vol.

Income, risk aversion, and the demand for insurance

"Experimental Confirmation of the Existence of a Giffen Good." American Economic Review, September 1991, 961-70.

Focusing the search for Giffen behavior

The question of interest is how to define a Giffen good. In the original sense of Hicksian utility analysis, potential Giffen goods are generated by very unusual preferences.