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Giffen Behavior and Subsistence Consumption

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  • Robert T. Jensen
  • Nolan H. Miller
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    Abstract

    This paper provides the first real-world evidence of Giffen behavior, i.e., upward sloping demand. Subsidizing the prices of dietary staples for extremely poor households in two provinces of China, we find strong evidence of Giffen behavior for rice in Hunan, and weaker evidence for wheat in Gansu. The data provide new insight into the consumption behavior of the poor, who act as though maximizing utility subject to subsistence concerns. We find that their elasticity of demand depends significantly, and nonlinearly, on the severity of their poverty. Understanding this heterogeneity is important for the effective design of welfare programs for the poor. (JEL D12, O12)

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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 98 (2008)
    Issue (Month): 4 (September)
    Pages: 1553-77

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    Handle: RePEc:aea:aecrev:v:98:y:2008:i:4:p:1553-77

    Note: DOI: 10.1257/aer.98.4.1553
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Looking for Giffen
      by Economic Logician in Economic Logic on 2008-12-06 03:36:00
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    Cited by:
    1. Rodrik, Dani, 2008. "The New Development Economics: We Shall Experiment, but How Shall We Learn?," Working Paper Series rwp08-055, Harvard University, John F. Kennedy School of Government.
    2. Marek Hudík, 2011. "Rothbardian demand: A critique," The Review of Austrian Economics, Springer, vol. 24(3), pages 311-318, September.
    3. Gharad Bryan & Shyamal Chowdhury & Ahmed Mushfiq Mobarak, 2014. "Under-investment in a Profitable Technology: The Case of Seasonal Migration in Bangladesh," NBER Working Papers 20172, National Bureau of Economic Research, Inc.
    4. Corinna Manig & Alessio Moneta, 2009. "More or Better ? Measuring Quality versus Quantity in Food Consumption," LEM Papers Series 2009/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Minagawa, Junichi, 2012. "On Giffen-like goods," Economics Letters, Elsevier, vol. 115(2), pages 282-285.
    6. Jensen, Robert T. & Miller, Nolan, 2008. "Do Consumer Price Subsidies Really Improve Nutrition?," Working Paper Series rwp08-025, Harvard University, John F. Kennedy School of Government.
    7. Chen, Xi & Zhang, Xiaobo, 2012. "Costly posturing: relative status, ceremonies and early child development in China:," IFPRI discussion papers 1206, International Food Policy Research Institute (IFPRI).
    8. Yochanan Shachmurove & Janusz Szyrmer, 2011. "Sir Robert Giffen Meets Russia in Early 1990s," PIER Working Paper Archive 11-020, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    9. Veronika A. Andorfer & Ulf Liebe, 2014. "Do Information, Price, or Morals Influence Ethical Consumption? A Natural Field Experiment and Customer Survey on the Purchase of Fair Trade Coffee," University of Bern Social Sciences Working Papers 6, University of Bern, Department of Social Sciences.
    10. Schwab, Benjamin, 2013. "In the form of bread? A randomized comparison of cash and food transfers in Yemen," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150448, Agricultural and Applied Economics Association.
    11. McFall, William & Magnan, Nicholas & Spielman, David J., 2013. "Hybrid Rice as a Pro-Poor Technology? Evidence from Bangladesh," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150150, Agricultural and Applied Economics Association.
    12. Bruton, Garry D. & Ketchen, David J. & Ireland, R. Duane, 2013. "Entrepreneurship as a solution to poverty," Journal of Business Venturing, Elsevier, vol. 28(6), pages 683-689.
    13. Sakai, Yoko & Estudillo, Jonna P. & Fuwa, Nobuhiko & Higuchi, Yuki & Sawada, Yasuyuki, 2012. "Do Natural Disasters Affect the Poor Disproportionately? The Case of Typhoon Milenyo in the Rural Philippines," PRIMCED Discussion Paper Series 31, Institute of Economic Research, Hitotsubashi University.

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    1. Economic Logic blog

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