Giffen Behavior Independent of the Wealth Level

Junko Doi (), Kazumichi Iwasa () and Koji Shimomura
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Junko Doi: Kansai University
Kazumichi Iwasa: Kyoto University

A chapter in New Insights into the Theory of Giffen Goods, 2012, pp 105-126 from Springer

Abstract: Abstract We demonstrate that a well-behaved utility function can generate Giffen behavior, where “well-behaved” means that its indifference curves are smooth, convex, and closed in a commodity space; the resulting demand function of each good is differentiable with respect to prices and income. Moreover, we show that Giffen behavior is compatible with any level of utility and an arbitrarily low share of income spent on the inferior good. This contrasts sharply with the common view that the Giffen paradox tends to occur when households’ wealth levels are low.

Keywords: Utility Function; Budget Constraint; Demand Function; Indifference Curve; Expenditure Share (search for similar items in EconPapers)
Date: 2012
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Journal Article: Giffen behavior independent of the wealth level (2009)
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DOI: 10.1007/978-3-642-21777-7_9

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