Abstract
Abstract In the study of Giffen behavior or “Giffenity”, there remains a paradox. On the one hand, the Wold-Juréen (1953) utility function has been touted as the progenitor of a multi-decade search for those two-good, particular utility functions, which exhibit Giffenity. On the other hand, there is no evidence that the Wold-Juréen (1953) utility function has ever been fully evaluated for Giffenity, with perhaps one minor exception, Weber (, 1997). But there, Weber showed that the Giffenity of Good 1 depends upon the relative magnitude of income vis-à-vis the price of Good 2. Weber’s precondition is so vague that it lacks broad appeal. This paper offers a new and a clear cut precondition for Giffen behavior under the Wold-Juréen (1953) utility function. That is, we show that if the price of Good 1 is greater than or equal to the price of Good 2, then Good 1 is a Giffen good.
Highlights
Within the domain of consumer theory, there has been a multi-decade search for two-good, particular utility functions which exhibit Giffen’s paradox or “Giffenity”
The Wold-Juréen (1953) utility function has been touted as the progenitor [viz., Moffatt (2011, page 127) stated that: “(e)ver since Wold and Juréen’s attempt to illustrate the Giffen paradox by specifying a particular direct utility function, there has been a stream of contributions from authors pursing similar objectives”]
The research literature provides no evidence that the WoldJuréen (1953) utility function has ever been fully evaluated for Giffenity, except for Weber (1997)
Summary
Within the domain of consumer theory, there has been a multi-decade search for two-good, particular utility functions which exhibit Giffen’s paradox or “Giffenity” (to use modern-day parlance) This exploration began with Wold and Juréen (1953), and it has gone on to include such papers as Vandermeulen (1972), Spiegel (1994), Weber (1997), Nachbar (1998), Moffatt (2002), Sørensen (2007), Doi et al (2009), Heijman and van Mouche (2011), Moffatt (2011), Haagsma (2012), Biederman (2015), and Landi (2015).
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