IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v231y2011i4p516-521.html
   My bibliography  Save this article

Purchasing-power-dependent Preferences as a New Explanation of Giffen Behaviour: A Note

Author

Listed:
  • Heuson Clemens

    (Helmholtz-Zentrum für Umweltforschung – UFZ Department Ökonomie, Permoserstraße 15, 04318 Leipzig, Germany)

Abstract

This paper develops an example beyond traditional microeconomic theory that provides a new explanation of Giffen behaviour. Maslow’s hierarchy of needs suggests that an individual’s preferences are not fixed but, rather, depend on purchasing power. A decrease in purchasing power with respect to low-hierarchy goods (e.g., bread) is likely to augment an individual’s preferences for such goods and to weaken preferences for high-hierarchy goods (e.g., books). By introducing a simple purchasing-power-dependent utility function that satisfies the standard assumptions, it is shown that the preference-shifting effect can provoke Giffen behaviour.

Suggested Citation

  • Heuson Clemens, 2011. "Purchasing-power-dependent Preferences as a New Explanation of Giffen Behaviour: A Note," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(4), pages 516-521, August.
    • Handle: RePEc:jns:jbstat:v:231:y:2011:i:4:p:516-521
    DOI: 10.1515/jbnst-2011-0405
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-2011-0405
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-2011-0405?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Christian E. Weber, 1997. "The Case of a Giffen Good: Comment," The Journal of Economic Education, Taylor & Francis Journals, vol. 28(1), pages 36-44, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sproule, Robert & Karras, Michael, 2022. "A Precondition-Free Demonstration That the Wold-Juréen (1953) Utility Function (Always) Generates a Giffen Good," MPRA Paper 113005, University Library of Munich, Germany.
    2. Sproule, Robert A., 2020. "The delimitation of Giffenity for the Wold-Juréen (1953) utility function using relative prices: A note," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 14, pages 1-8.
    3. Sproule, Robert & Karras, Michael, 2022. "In Search of A Giffen Input: A Comprehensive Analysis of The Wold-Juréen (1953) Production Function," MPRA Paper 113007, University Library of Munich, Germany.
    4. Junko Doi & Kazumichi Iwasa & Koji Shimomura, 2012. "Giffen Behavior Independent of the Wealth Level," Lecture Notes in Economics and Mathematical Systems, in: Wim Heijman & Pierre Mouche (ed.), New Insights into the Theory of Giffen Goods, pages 105-126, Springer.
    5. Landi, Massimiliano, 2015. "A class of symmetric and quadratic utility functions generating Giffen demand," Mathematical Social Sciences, Elsevier, vol. 73(C), pages 50-54.
    6. Miller, Anne, 2023. "Demand Theory for Poverty and Affluence: A Contribution to Utility Theory," MPRA Paper 117618, University Library of Munich, Germany, revised 13 Jun 2023.
    7. Sproule, Robert, 2023. "The Anomalies Of The Wold-Juréen (1953) Functional Form In Overview," MPRA Paper 117835, University Library of Munich, Germany.
    8. Peter Moffatt & Keith Moffatt, 2011. "Mirror utility functions and reflexion properties of various classes of goods," University of East Anglia Applied and Financial Economics Working Paper Series 031, School of Economics, University of East Anglia, Norwich, UK..
    9. Massimiliano Landi, 2014. "A Class of Symmetric and Quadratic Utility Functions Generating Giffen Demand," Working Papers 21-2014, Singapore Management University, School of Economics.
    10. Robert SPROULE & Michael KARRAS, 2022. "Two conditions which induce Giffen behavior in any numerical analysis if applied to the Wold-Juréen (1953) utility function," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(633), W), pages 197-204, Winter.
    11. Peter G. Moffatt, 2012. "A Class of Indirect Utility Functions Predicting Giffen Behaviour," Lecture Notes in Economics and Mathematical Systems, in: Wim Heijman & Pierre Mouche (ed.), New Insights into the Theory of Giffen Goods, pages 127-141, Springer.
    12. Miller, Anne, 2022. "Demand theory for poverty and affluence," MPRA Paper 116144, University Library of Munich, Germany.
    13. Moffatt, Peter G., 2002. "Is Giffen behaviour compatible with the axioms of consumer theory?," Journal of Mathematical Economics, Elsevier, vol. 37(4), pages 259-267, July.
    14. Sproule, Robert, 2022. "On The History and The Mathematics of The Wold-Juréen (1953) Utility Function, And Its Basis For The Modeling of Giffen Behavior," EconStor Preprints 263912, ZBW - Leibniz Information Centre for Economics.
    15. Peter Sørensen, 2007. "Simple Utility Functions with Giffen Demand," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 31(2), pages 367-370, May.
    16. Sproule, Robert & Karras, Michael, 2022. "Two Conditions Which Induce Giffen Behavior In Any Numerical Analysis When Applied To The Wold-Juréen (1953) Utility Function," MPRA Paper 112558, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:231:y:2011:i:4:p:516-521. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.