IDEAS home Printed from https://ideas.repec.org/h/spr/lnechp/978-3-642-21777-7_9.html
   My bibliography  Save this book chapter

Giffen Behavior Independent of the Wealth Level

In: New Insights into the Theory of Giffen Goods

Author

Listed:
  • Junko Doi

    (Kansai University)

  • Kazumichi Iwasa

    (Kyoto University)

  • Koji Shimomura

    (Kobe University)

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.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:lnechp:978-3-642-21777-7_9
    DOI: 10.1007/978-3-642-21777-7_9
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Zinde-Walsh, Victoria, 1995. "ESTIMATION AND INFERENCE IN ECONOMETRICSRussell Davidson and James G. MacKinnon Oxford University Press, 1993," Econometric Theory, Cambridge University Press, vol. 11(3), pages 631-635, June.
    2. Junko Doi & Kazumichi Iwasa & Koji Shimomura, 2006. "Indeterminacy in the free-trade world," Discussion Paper Series 187, Research Institute for Economics & Business Administration, Kobe University.
    3. John H. Nachbar, 1998. "The last word on Giffen goods?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(2), pages 403-412.
    4. 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.
    5. Vandermeulen, Daniel C, 1972. "Upward Sloping Demand Curves Without the Giffen Paradox," American Economic Review, American Economic Association, vol. 62(3), pages 453-458, June.
    6. 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.
    7. 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.
    8. Kazuo Nishimura & Koji Shimomura, 2006. "Indeterminacy in a dynamic two-country model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 307-324, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Massimiliano Landi, 2014. "A Class of Symmetric and Quadratic Utility Functions Generating Giffen Demand," Working Papers 21-2014, Singapore Management University, School of Economics.
    2. Landi, Massimiliano, 2015. "A class of symmetric and quadratic utility functions generating Giffen demand," Mathematical Social Sciences, Elsevier, vol. 73(C), pages 50-54.
    3. Kazuyuki Sasakura, 2016. "Slutsky Revisited: A New Decomposition of the Price Effect," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(2), pages 253-280, July.
    4. Sushama Murty, 2012. "Microfoundations for the Environmental Kuznets Curve: Invoking By-Production, Normality and Inferiority of Emissions," Discussion Papers 1203, University of Exeter, Department of Economics.
    5. Le Van, Cuong & Pham, Ngoc-Sang, 2020. "Demand and equilibrium with inferior and Giffen behaviors," Mathematical Social Sciences, Elsevier, vol. 103(C), pages 45-50.
    6. Massimiliano Landi, 2012. "Single Peakedness and Giffen Demand," Working Papers 02-2012, Singapore Management University, School of Economics.
    7. Hoang, Hoa & Meyers, William H., 2015. "Rice demand in Vietnam: Dietary changes and implications for policy," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196621, Southern Agricultural Economics Association.
    8. 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.
    9. Biederman, Daniel K., 2015. "A strictly-concave, non-spliced, Giffen-compatible utility function," Economics Letters, Elsevier, vol. 131(C), pages 24-28.
    10. Franks, Edwin & Bryant, William D.A., 2018. "The Uncompensated Law of Demand in an exchange economy," Economics Letters, Elsevier, vol. 168(C), pages 127-131.
    11. Kazuyuki Sasakura, 2021. "Calculating a Giffen Good," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(3), pages 349-369, November.
    12. Zhu, Drew, 2016. "The Mechanism of Giffen Behaviour," MPRA Paper 75707, University Library of Munich, Germany.
    13. 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..
    14. Olli Salmensuu, 2021. "Potato Importance for Development Focusing on Prices," JRFM, MDPI, vol. 14(3), pages 1-14, March.
    15. Eric Bond & Kazumichi Iwasa & Kazuo Nishimura, 2011. "A dynamic two country Heckscher–Ohlin model with non-homothetic preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(1), pages 171-204, September.

    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 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.
    2. Landi, Massimiliano, 2015. "A class of symmetric and quadratic utility functions generating Giffen demand," Mathematical Social Sciences, Elsevier, vol. 73(C), pages 50-54.
    3. Massimiliano Landi, 2014. "A Class of Symmetric and Quadratic Utility Functions Generating Giffen Demand," Working Papers 21-2014, Singapore Management University, School of Economics.
    4. 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.
    5. Eric Bond & Kazumichi Iwasa & Kazuo Nishimura, 2011. "A dynamic two country Heckscher–Ohlin model with non-homothetic preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(1), pages 171-204, September.
    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. Biederman, Daniel K., 2015. "A strictly-concave, non-spliced, Giffen-compatible utility function," Economics Letters, Elsevier, vol. 131(C), pages 24-28.
    8. Sproule, Robert, 2023. "The Anomalies Of The Wold-Juréen (1953) Functional Form In Overview," MPRA Paper 117835, University Library of Munich, Germany.
    9. 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..
    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. 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.
    13. Kazuyuki Sasakura, 2016. "Slutsky Revisited: A New Decomposition of the Price Effect," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(2), pages 253-280, July.
    14. Miller, Anne, 2022. "Demand theory for poverty and affluence," MPRA Paper 116144, University Library of Munich, Germany.
    15. 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.
    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.
    17. Franks, Edwin & Bryant, William D.A., 2018. "The Uncompensated Law of Demand in an exchange economy," Economics Letters, Elsevier, vol. 168(C), pages 127-131.
    18. Jose Apesteguia & Miguel Ballester, 2009. "A theory of reference-dependent behavior," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(3), pages 427-455, September.
    19. Naoki Yoshihara & Soh Kaneko, 2016. "On the Existence and Characterization of Unequal Exchange in the Free Trade Equilibrium," Metroeconomica, Wiley Blackwell, vol. 67(2), pages 210-241, May.
    20. Bjarne S. Jensen, 2004. "Pareto Efficiency, Relative Prices, and Solutions to CGE Models," DEGIT Conference Papers c009_006, DEGIT, Dynamics, Economic Growth, and International Trade.

    More about this item

    Keywords

    Utility Function; Budget Constraint; Demand Function; Indifference Curve; Expenditure Share;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

    Statistics

    Access and download statistics

    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:spr:lnechp:978-3-642-21777-7_9. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.