Giffen Behaviour Research Articles

Microeconomics of Metabolism: The Warburg Effect as Giffen Behaviour

Metabolic behaviours of proliferating cells are often explained as a consequence of rational optimization of cellular growth rate, whereas microeconomics formulates consumption behaviours as optimization problems. Here, we pushed beyond the analogy to precisely map metabolism onto the theory of consumer choice. We thereby revealed the correspondence between long-standing mysteries in both fields: the Warburg effect, a seemingly wasteful but ubiquitous strategy where cells favour aerobic glycolysis over more energetically efficient oxidative phosphorylation, and Giffen behaviour, the unexpected consumer behaviour where a good is demanded more as its price rises. We identified the minimal, universal requirements for the Warburg effect: a trade-off between oxidative phosphorylation and aerobic glycolysis and complementarity, i.e. impossibility of substitution for different metabolites. Thus, various hypotheses for the Warburg effect are integrated into an identical optimization problem with the same universal structure. Besides, the correspondence between the Warburg effect and Giffen behaviour implies that oxidative phosphorylation is counter-intuitively stimulated when its efficiency is decreased by metabolic perturbations such as drug administration or mitochondrial dysfunction; the concept of Giffen behaviour bridges the Warburg effect and the reverse Warburg effect. This highlights that the application of microeconomics to metabolism can offer new predictions and paradigms for both biology and economics.

Is Giffen behaviour compatible with residential demand for cooking gas and kerosene?

PurposeThis paper aims to examine the compatibility of Giffen behaviour with residential demand for kerosene and cooking gas.Design/methodology/approachIn total, 600 questionnaires were administered on selected households in Ondo State while 485 were retrieved. Both ordinary least square and instrumental variables (IVs) were estimated, while, the IV estimated result was preferred.FindingsThe result showed that Giffen behaviour is compatible with the demand for kerosene in Ondo State, but not for cooking gas. As regard to other factors, prices of the alternatives to kerosene and cooking gas have positive but insignificant impact on the demand for the respective products. Age of the household has a positive significant impact on the demand for kerosene and cooking gas. Household in which the heads has tertiary education demand for kerosene and cooking gas more than those without any form of education. Larger households consume more of both commodities than smaller households.Research limitations/implicationsBased on these findings, the authors recommend that government should continue to subsidize either the production or consumption of household kerosene.Practical implicationsConsumers should not mind the initial expenditure in purchasing cylinder for cooking gas as subsequent expenditure would be lower than that of kerosene.Social implicationsRegulators should brace to ensure that kerosene and cooking gas be made available at government-regulated prices, particularly by checkmating the activities of the “black-marketers.”Originality/valueTwo outstanding knowledge gaps that this paper filled are in the novelty of this paper regarding the application of Giffen behaviour to kerosene and cooking gas. Second, previous studies did not account for the potential endogeneity problem that is inherent in the joint demand for kerosene and cooking gas. This paper took care of this by estimating the model using IVs.

Not So Dull? Simon Gray and Giffen Behaviour

It has been argued that The Happiness of States by Simon Gray contains a precursor analysis of a Giffen good. That reading, however, produces a misleading account of the significance of Gray’s text within a teleological history of Giffen behaviour. After providing some new information for Gray’s biography, this article shows that he was one of the few nineteenth-century British political economists who argued that speculators did not necessarily play a beneficial role in food markets. It is also shown how Gray’s text has been read to install him as a pioneer of the twentieth-century Giffen good.

Evolutionary Control of Economic Strategy in Fishes: Giffen Behaviour could be a Common Economic Strategy on the Earth?

The existence of Giffen behaviour (i.e. the opposite situation to the Law of Demand in which consumers respond to a rising price of a certain good by demanding more of it) associated with poor consumers is one of the major controversies in economics. However, economists rarely consider that nothing makes sense except in light of evolution. In this paper, we prove the existence of Giffen behaviour in animals that exhibit no intelligent reasoning. Sardines feed on phytoplankton, and zooplankton. If the amount of phytoplankton is greater than zooplankton, then Sardines fit the Law of Demand, but if the amount of phytoplankton is smaller, the Sardines apparently show Giffen behaviour. Evolutionary population genetics models show that Giffen behaviour has more adaptive value than follow the Law of Demand under resource scarcity. Since overwhelming animal species live in poverty, Giffen behaviour may be the common economic strategy on the Earth.

PRINCIPLES OF ECONOMETHICS FROM THE GIFFEN DEMAND

This paper raises an approach to the study of consumer behaviour and markets with a particular emphasis on agricultural commodities. It develops an analysis of demand for certain products during a recent economic recession in Spain by showing the behaviour of some of them as Giffen goods in some years. According to the theory of Giffen demand, there is a direct (positive) relationship between price and the quantity demanded. Thus, the income effect outweighs the substitution effect. The main contributions of this work can be summarized in the next three points: 1) This paper studies the consumer behaviour from a Giffen perspective, beyond a traditional and rational utility approach; 2) It also suggests a framework to analyse several socioeconomic proposals and theories related to the sustainability and Human Rights-based ethic level (intrinsic to Giffen behaviour); 3) Finally, this theory is a significant contribution to design better economic policies. The analysis of Giffen phenomenon has greater explanatory power than the classical theory of Marshall. It also helps to reveal a number of important effects that are usually ignored and that could contribute to clarify some current economic phenomena.

On Price and Income Effects in Discrete Choice Models

We consider the classical micro-economic foundation of discrete choice, additive random utility models, with conditional utilities depending on expenditure on the numéraire. We show that signs of own- and cross-price effects are identified on the basis of the primal problem only, and Giffen behaviour is ruled out. For the translog specification, we prove that the alternative with highest price behaves as normal good, and the alternative with lowest price behaves as inferior good. We establish conditions for equivalence between the primal and the dual problem. We provide a discrete choice version of the Slutsky equation which, similarly to divisible goods, decomposes the own-price effect into a substitution and an income effect.

A peculiar archaeology: Searching for Mr Giffen's behaviour

It has been claimed that references to ‘Giffen behaviour’ constituted a single research project, driven by attempts to establish whether an initial ‘conjecture’ by Alfred Marshall had empirical validity. There is no stable basis for that claim because Marshall's discussion was contradictory and Robert Giffen rejected a key assumption made by Marshall. By the mid-1920s, discussion of an upward-sloping demand curve attached no particular significance to a Marshallian story. The formulation of the Irish famine Giffen exemplar by P.A. Samuelson illustrates how Giffen behaviour was stabilised as the single possible exception to the law of demand in the 1960s.

Giffen Goods and their Reflexion Property

The following ‘reflexion property’ of Giffen behaviour is proved: the two‐good direct utility function (DUF) obtained by reversing the sign of two‐good indirect utility function (IUF) displays Giffen behaviour with respect to one of the two goods if and only if the IUF itself displays Giffen behaviour with respect to the other good. A particular IUF showing Giffen behaviour for both goods (in non‐overlapping regions of the price space) is constructed and the reflexion property is verified. The example IUF is extended to more than two goods, and Giffenity is verified in this case.

A Convenient Utility Function with Giffen Behaviour

The paper proposes a simple utility function that can generate Giffen behaviour. The function suggests an alternative direction where Giffen behaviour can be found and also implies a convenient framework for empirical testing. Moreover, because of its simple form, the utility function is well-suited for teaching purposes.

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

Summary 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.

Is Giffen behaviour compatible with the axioms of consumer theory?

A family of direct utility functions is constructed which exhibit the characteristic of Giffenity, while satisfying the axioms of convexity and monotonicity. The approach starts by specifying a price offer curve, C 0, with a required backward-bending segment. Then a set of convex indifference curves is constructed having price offer curve arbitrarily close to C 0.