Giffen Good Research Articles

Changes in the structure of household expenditure in urban and rural China

ABSTRACT In the last two decades, China has witnessed a remarkable change in household expenditure structure following the rapid growth of household income. Using provincial-level panel data from 2001 to 2019 and the Quadratic Almost Ideal Demand System model, we derive the expenditure elasticities, as well as uncompensated and compensated price elasticities, for urban and rural households. Our results suggest that food and clothing are ‘necessity’ goods, whereas residence, education, and transportation are ‘luxury’ goods for both urban and rural households. Household facilities and medical services are necessities for urban households, while they are luxuries for rural households. All own-price elasticity estimates are negative, indicating that no Giffen goods exist. We also observe temporal changes in the household expenditure structure over China’s Five-Year Plan cycles. Finally, we find significant differences in the own-price elasticity across the eastern, central, and western regions with varying levels of economic development.

Theoretical Analysis and Case Study of Giffen Effect in Commodity and Labor Market

The Giffen effect is a particular economic phenomenon that only occurs in a specific background. Due to its effect on both commodity and labor markets, the Giffen effect became an irreplaceable phenomenon in the development of economy and society. Despite the fact that it is a rare incidence, it still can be found in daily life. Under the circumstance of COVID-19, the mask is a quintessential example of the Giffen goods. At the same time, the mask provides a more tangible explanation of the Giffen effect. This study mainly focuses on explaining the Giffen effect and its influence on the commodity and labor market. Furthermore, the paper also helps to illustrate the real-life example of Giffen goods. The terminal goal of the study is to explore the effects of Giffen goods, and provide others about the idea of the Giffen effect and figure out its main characters. This study also provides a reference for researchers who are interested in this area and willing to spend more time exploring it.

Потребление продовольствия в российской федерации за 1998-2022 годы : вызовы и институциональные ответы

The article studies the dynamics of food consumption in the Russian Federation for 1998–2022. The methodological basis of the presented work is a comprehensive approach, which takes into account the long-term dynamics of food consumption in the Russian Federation, the main macroeconomic indicators and their interrelations in connection with the issues of the development of the food market in our country. For the period 1998–2022, the per capita consumption of food products has increased: fruit and berries by 89.6%, meat and meat products by 62.6%, vegetable oil by 42.2%, vegetables and melons by 35.2%, eggs and egg products by 24.0%, sugar by 12.7%, milk and milk products by 8.2%; the consumption of potatoes has decreased by 20.7%, bread products by 2.2%. The consumption of staple foodstuffs was assessed in relation to the dietary intake levels: above the norm: sugar, vegetable oil, meat and meat products, bread products, eggs and egg products; below the norm: potatoes, milk and dairy products, vegetables and melons, fruit and berries. The hypothesis was confirmed that as the income of the population increases, the consumption of expensive foods in the diet increases, the quality of food improves and the consumption of low quality and/or Giffen goods in the diet of the population may decrease. The influence of seven main indicators of macroeconomic transformation on the consumption of nine staple foodstuffs is shown. The concept of changing the policy of state regulation of the agrarian sector from supply support to demand/consumption support, developing institutions and institutional mechanisms of domestic food aid in Russia is proposed.

Gems of Germans in Namibia

"What do we really need, water or diamond?” This question occurs very frequently in education of the Economics. And when a professor asks it, a student will answer with confidence, “Water, of course!” If this student has got some good knowledge in Biology, the professor and probably even the entire group will get the explanation that 60-70% of human body is water, and there is no survive without water, so “the only correct answer can be water”. Some student with rebellious mindset will preach about the bad condition of our planet, namely, how exploited the Earth is, when it comes to resources. Probably there will also be a more realistic student who will pose to his audience the question, “It’s obvious that we need water so badly, but what would you give to your beloved one, a nice ring with well-shaped diamonds, or a bottle of water?” After this short and improvised debate, our professor would introduce the concept of Giffen goods, and his students would have to approve the fact that people like to make decisions beyond their real interests. Therefore, the homo economicus remains a vulnerable character in further economic analysis.

Prevention as a Giffen Good

A criterion is provided for prevention to be a Giffen good. Under decreasing absolute risk aversion, prevention can only be Giffen if the loss probability is below an endogenous threshold value. For iso-elastic utility, this is possible but not empirically plausible.

Not all Giffen Goods, are Inferior Goods

It is well known in the economic literature that the labor supply curve can bend backwards and, therefore, that leisure can be a Giffen good. It is also known that leisure can be a normal good. This article proves that if leisure is a Giffen good, it has to be a normal good. This result also proves that, contrary to common knowledge in economics, not all Giffen goods, are inferior goods. The results presented here could be taken into account, for example, when finding empirical evidence and designing policies on labor supply, in an era of machine learning and artificial intelligence.

Giffen goods, backward bending supply curves, price controls and praxeology; or, who’s afraid of the big bad boogie man of giffen goods and backward bending supply curves? Not us

What is the status of claims about the effects of minimum wage laws? Empirical or praxeological? We claim the latter. How can the effect of such legislation be best analyzed under the assumption of mis-behaving supply (backward bending) and demand (positively sloped, based on positing Giffen goods) curves? In the usual manner: resource misallocation still occurs. But this is only arguendo. More radically, such curves are themselves problematic. Even more radically, this, too, applies to «well behaved» supply and demand curves as well. Key words: Backward Bending Supply Curves, Price Controls, Praxeology, Giffen Goods, Logical Positivism. JEL Classification: D0. Resumen: ¿Cuál es el status del análisis sobre los efectos de las leyes de salario mínimo? ¿Empírico o praxeológico? Nosotros defendemos lo se gundo. ¿Pueden analizarse mejor los efectos de dichas leyes suponiendo curvas de oferta y demanda anómalas (como las de los bienes Giffen)? Como en el nálisis tradicional se produce una mala asignación de recursos. En todo caso, tanto tales curvas, como las tradicionales son muy problemáticas. Palabras clave: Control de precios, praxeología, bienes de Giffen, positivismo lógico. Clasificación JEL: D0.

The Inviolable Law of Demand

We extend upon Reeves (2020), who attempts to demonstrate that classical violations of the Law of Demand are in actuality the result of a violation of the ‘ceteris paribus’ assumption. For example, price changes in Giffen goods create a chain reaction from the Giffen good through a substitute and back to the Giffen good. Specifically, a price change in the Giffen good is so large wrt the consumer’s income that it creates an income effect on a substitute good, whose decrease in demand sends a shock to the Giffen good’s demand curve, shifting it out through a change in preferences and, hence, violating ceteris paribus. To understand how preferences change, consider the consumer equilibrium condition, MU(x) = λp. When price increases and income (i.e. λ) is held constant, marginal utility must increase. In order for x to increase with price, marginal utility must increase with consumption, violating the Law of Diminishing Marginal Utility. Hence, the change in price must precipitate a change in preferences because for some values of x preferences comport with the Law of Diminishing Marginal Utility whereas for other values of x preferences do not. In this paper, we respond to the non-technical aspects of Jensen and Nolan (2007) by suggesting that the price and demand changes that they are measuring are likely changes along the supply curve, not an upward sloping demand curve. One possible reason for the purported oversight is that the research explores Giffen effects in (good1 , good2 )-space, which cannot capture shifts in the demand curve, defined in (good1 , price1 )-space.

To the Question of Giffen's Parafox

The article is devoted to the construction and analysis of the simplest mathematical model illustrating the Giffen’s effect and the reasons and conditions for its manifestation. We analyse erroneous, but widely spread, ideas about Giffen’s goods as a good, the demand for which grows due to its relative cheapening against the rising prices for all consumed goods. Under the model it is shown that any good can be both valuable and of little value, at least if it has a more expensive substitute. This property is not an intrinsic and inalienable property of one or another good. The certain property is given to any good by a specific consumer due to its personal preferences and under the influence of existing prices. Inferior good, including such, the consumption of which is available only to an individual with a high level of income, may turn out to be a product of Giffen. Therefore, the consumption of Giffen goods cannot be considered as evidence of a low standard of living for the consumer. Because of the solution of the standard task on the consumer choice, it is shown that the increase in demand for an inferior good when its price is growing, which is the essence of the Giffen paradox, is the result of optim. It is shown that for the manifestation of the Giffen effect it is necessary that the amount of funds allocated by the consumer for acquiring low value good and its more expensive substitute gets into a certain rather narrow range of values.

The Z Curve:

The demand for a Giffen good is atypical, i.e. it increases as prices rise. The traditional representation for this phenomenon is a simple upward sloping demand curve. This model is very problematic, because it implies that demand can oscillate between infinity and negative infinity, an unrealistic scenario to say the least. In this paper we briefly discuss the problems with the traditional model and propose a better one: the Z curve. Because Giffen goods are a consequence of a reduction in the consumer’s income, the Z curve illustrates the effects of this change on wealth. Our goal here is not to dismiss the mental construction of Giffen Goods entirely . Rather, we bring forth what we believe to be a more precise method to graphically represent Giffen Goods.

Karakter Giffen Pada Komoditas Arang Tempurung Kelapa

The problem of rising fossil energy faced with the limited availability of the commodity in the future. Therefore, it needs new energy sources to tackle the issue. An alternative that can help the economy is the utilization of waste coconut shell that is processed into charcoal. With using principal component analysis, the result of the estimation indicates, there is a unique character that is contained in the shell charcoal commodity. The character of shell charcoal is closed to Giffen goods behavior. The most logical answer is because charcoal is the main raw material of shell burning for a restaurant that has a menu that was burned; and it becomes the unique preferences of the restaurant. They prefer barbecuing their food menu by using charcoal rather than other fuels such as stove, which uses kerosene and LPG. It is because barbecuing with charcoal will produce a better aroma than using the stove with fuel kerosene or LPG.

AN ECONOMETRIC ANALYSIS OF THE PATTERN OF CONSUMER SPENDING ON FOOD IN EGYPT

consumer spending on food in EGYPT, and derive the price and expenditure elasticity for various categories of food goods in Egypt by applying Complete Demand Systems (The Linear Expenditure System LES) & Partial Demand Models (Analysis of Engel Curves), using cross-section data from the Egyptian Household Income, Expenditure, and Consumption Survey (HIECS) conducted in 2010 & 2015 by CAPMAS: the results show that: The results of the LES model show that about 40% of the Supernumerary Expenditure is directed to the meat group, followed by the milk, cheese and eggs group by 16%, the fish group by 10%, then, the fruit group by 9% and the cereal and bread group by 8%, so this groups has an important place in the menu of the Egyptian consumer. The Food Poverty line for each person in 2015 is estimated at LE 6042 / person / year. From the previous results, A family of five- person needs LE 2517 per month to meet their basic needs. The expenditure elasticity of demand is estimated based on the regression model of Engel curves. According to the expenditure elasticity, the commodities are classified into three categories as necessities, luxuries and Giffen Good. The commodities, which have expenditure elasticity less than one, are called necessities, while, the commodities whose expenditure elasticity exceeds one, are called luxuries, then, the commodities whose negative expenditure elasticity, are called Giffen Good. The results of the analysis of food expenditure showed that expenditure elasticity for all food commodity were positive(without pasta & Lentil); indicating that demand for these products will continue to increase with growing real income and improving the level of Egyptian society. Therefore, the future demand for these foods would most likely increase steeply. Egypt will need to increase its production of these foods, especially livestock products that have high expenditure elasticity. The same holds true for Non Subsidized bread, natural butter, honey, dairy, yogurt, and fresh fine fish. - From the previous results, Family of five- person needs LE 2517 per month to meet their basic needs, so a policy must be adopted to ensure the redistribution of income among individuals in order to raise the standard of living of certain groups under The Food Poverty line. - The current estimates of price elasticity’s should be very useful in the design of many different government policies.

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 the Existence of "Giffen Goods" again

Whether Giffen goods exist or not has long been a argument in economics academic circle. This paper analyzes and evaluates the two opposing arguing points represented by Zhang Wuchang and Wang Dingding. At the same time, through analyzing in depth the explanation offered by Hicks Decomposition to Giffen goods in economics textbook,the paper points out that Hicks Decomposition to Giffen goods is against the axiom of Diminishing Marginal Utility, so that Giffen good is not likely to exist in reality.

An Exchange Economy of Essential Liberties and Power

Axioms order preferences over endowments of essential liberties and power, but not all goods are modeled as non-satiated. Essential liberties are normal goods with respect to the budget constraint of power up to thresholds of satiation of power, after which essential liberties model as Giffen goods. State and federal amended constitutions are examples of the more general results obtained within. Of significant normative and positive interest is establishing the thresholds of power satiation with respect to civil liberties. The paper offers the normative theory that social compacts seek to minimize Type I AND Type II errors of the null hypothesis that a defendant is innocent in a civil or criminal suit. The thresholds are then the significance and specificity that are conditional on the degree of perceived social cost (the difference between the means of the null and alternate hypothesis) and the moments of the test statistic (evidence).

Giffen Goods Theory Under Demand Law

Aiming at the wrong recognition over one century that Giffen goods are special examples of demand law and Giffen goods are rare, this paper strictly proves that the demand curve of any Giffen goods can only slopes lower right and any commodity that complies with the demand law would probably become Giffen goods under certain conditions, and it defines and demonstrates the macroscopic Giffen phenomenon. This paper harshly criticizes the Giffen goods theory under consumer’s behavior theory.

Definition of Demand and Demand Axiom: Criticism on the Demand Definition of Mainstream Economics

The Chinese version of this paper can be found at http://papers.ssrn.com/abstract=1960697.This paper researches the consumers’ behavior theory and the demand definition of mainstream economics and finds that these definitions are different and in contradiction. Therefore, this paper proposes the Giffen criteria of demand definition. Under this criterion, the demand definitions of consumers’ behavior theory and mainstream teaching materials are all wrong. This paper redefines the demand and analyzes the difference between the demand definition of this paper and that of consumers’ behavior theory and mainstream economics. Under the demand definition of this paper, demand law has become an axiom. The demand curve of Giffen goods also slides lower right.

Sir Robert Giffen Meets Russia in Early 1990s

This paper analyzes the theoretical foundations of Giffen goods and details the difficulty with which prior studies have encountered limited empirical proof of Giffenity. Subsequently, a discussion of the economic overview of Russia during the early 1990s is provided. The paper then applies Giffenity to the newly established free market system of post-Soviet Union Russia while acknowledging changes in the prices for goods, specifically, for inferior food commodities. The paper concludes by advocating for the need to incorporate Giffenity into current economic theory to make it more comprehensive.

Local brands for local people

PurposeReviews the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.Design/methodology/approachThis briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.FindingsStudents who took Economics 101 in college will be familiar with the elasticity of demand, and how certain goods will maintain demand despite increases in price. In fact, some products – known as Giffen Goods – are in demand precisely because there is a demand level at a very high price that can be met. A good example of this in the twenty‐first century is the iPhone “app” that was $500 but did nothing other than show that whoever had this on their phone could afford it. Think of it as hi‐tech “bling” – much like the iPhone itself perhaps.Practical implicationsProvides strategic insights and practical thinking that have influenced some of the world's leading organizations.Originality/valueThe briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to‐digest format.

Perjury and Proving of Demand Law

This paper proves that there are almost no normal commodities for individual consumers in consumer behavior theory. The income effects of all abnormal commodities are negative and larger than substitution effects. Both income effects and substitution effects are unobservable. All proves on demand curves of normal individual commodities or abnormal commodities are absolutely meaningless vicious circles in logical sense. The nature of demand curve that slopes lower right is irrelevant with consumers’ psychology and behaviors. The proving of consumer behavior theory on individual demand law is a perjury. At the premise that there is no limitation on personal disposable incomes and other commodities’ prices and starting from the axiom, this paper provides a strict proving on the demand curve nature of any commodity that it slopes lower right. The demand curve of Giffen goods also slopes lower right.