Prevention as a Giffen good: Further results

Kit Pong Wong

Economics Letters, 2025, vol. 255, issue C

Abstract: This paper examines the demand for prevention when the price of prevention changes. We show that prevention cannot be a Giffen good for individuals who exhibit strongly decreasing downside risk aversion if the optimal probability of loss does not fall below 1/2. We further derive a necessary condition for the paradoxical result that prevention is a Giffen good. Calibrating the model with reasonable parameter values suggests that the necessary condition is unlikely to hold, rendering that prevention being a Giffen good may simply be a theoretical construct.

Keywords: Giffen goods; Prevention; Self-protection; Strong increases in downside risk aversion (search for similar items in EconPapers)
JEL-codes: D11 D81 G52 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176525003404
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:255:y:2025:i:c:s0165176525003404

DOI: 10.1016/j.econlet.2025.112503

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().