Giffen Behavior and Subsistence Consumption
Jensen and Miller provide what they describe as the first real-world evidence of Giffen behaviour, meaning upward-sloping demand. They subsidised the prices of dietary staples for very poor households in two provinces of China, and found strong evidence of Giffen behaviour for rice in Hunan and weaker evidence for wheat in Gansu. The data give insight into the consumption of the poor, who act as though maximising utility subject to subsistence concerns. Elasticity of demand depended significantly and nonlinearly on the severity of poverty.
Jensen and Miller provide what they describe as the first real-world evidence of Giffen behaviour, meaning upward-sloping demand. They subsidised the prices of dietary staples for very poor households in two provinces of China, and found strong evidence of Giffen behaviour for rice in Hunan and weaker evidence for wheat in Gansu. The data give insight into the consumption of the poor, who act as though maximising utility subject to subsistence concerns. Elasticity of demand depended significantly and nonlinearly on the severity of poverty.
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Jensen, R. T., & Miller, N. H. (2008). Giffen Behavior and Subsistence Consumption. American Economic Review, 98(4), 1553-1577.