Fantastic Giffen goods and where to find them

Ian Hamilton ()
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Ian Hamilton: University of Warwick

Economics Bulletin, 2025, vol. 45, issue 1, 55 - 62

Abstract: Giffen goods regularly feature in undergraduate and graduate level microeconomics courses. Nevertheless, they have taken on a somewhat fantastical status - misunderstood curios, whose existence in the real world is disputed. Explanations of their limited identification often rest on claimed properties, which have come to be understood as necessary for Giffen behavior. Using a dual constraint maximization construct, based on Marshall's original example, this paper demonstrates that Giffen goods need not have these claimed properties. Further, it suggests that real-world examples may be more common than has been generally thought, where they might be found, but also why identification has been limited. The analysis leads to the speculation that wider use of a more intuitive framework in the teaching of Giffen goods may have positive effects in areas such as financial regulation.

Keywords: Giffen behavior; Giffen paradox; comparative statics; demand theory; upward-sloping demand; consumer theory; economic pedagogy; substitution effect; income effect; financial regulation (search for similar items in EconPapers)
JEL-codes: A2 D1 (search for similar items in EconPapers)
Date: 2025-03-30
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