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Giffen Behavior: Theory and Evidence

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Author Info
Robert T. Jensen
Nolan H. Miller
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, with both demand and calorie elasticities depending significantly, and non-linearly, on the severity of their poverty. Understanding this heterogeneity is important for the effective design of welfare programs for the poor.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13243.

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Date of creation: Jul 2007
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Handle: RePEc:nbr:nberwo:13243

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Find related papers by JEL classification:
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dougan, William R, 1982. "Giffen Goods and the Law of Demand," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 809-15, August. [Downloadable!] (restricted)
  2. Koenker, Roger, 1977. "Was Bread Giffen? The Demand for Food in England Circa 1790," The Review of Economics and Statistics, MIT Press, vol. 59(2), pages 225-29, May. [Downloadable!] (restricted)
  3. Thomas, D. & Strauss, J., 1997. "Health and Wages: Evidence on Men and Women in Urban Brazil," Papers 97-05, RAND - Reprint Series.
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  4. Boland, L A, 1977. "Giffen Goods, Market Prices and Testability," Australian Economic Papers, Blackwell Publishing, vol. 16(28), pages 72-85, June.
  5. Sherwin Rosen, 1999. "Potato Paradoxes," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S294-29, December. [Downloadable!] (restricted)
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  6. George J. Stigler, 1947. "Notes on the History of the Giffen Paradox," Journal of Political Economy, University of Chicago Press, vol. 55, pages 152. [Downloadable!] (restricted)
  7. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132. [Downloadable!] (restricted)
  8. Gilley, Otis W & Karels, Gordon V, 1991. "In Search of Giffen Behavior," Economic Inquiry, Oxford University Press, vol. 29(1), pages 182-89, January.
  9. Battalio, Raymond C & Kagel, John H & Kogut, Carl A, 1991. "Experimental Confirmation of the Existence of a Giffen Good," American Economic Review, American Economic Association, vol. 81(4), pages 961-70, September. [Downloadable!] (restricted)
  10. Richard G. Lipsey & Gideon Rosenbluth, 1971. "A Contribution to the New Theory of Demand: A Rehabilitation of the Giffen Good," Canadian Journal of Economics, Canadian Economics Association, vol. 4(2), pages 131-63, May. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matthew A. Hanson, 2007. "The Economics of Roadside Bombs," Working Papers 68, Department of Economics, College of William and Mary. [Downloadable!]
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