Talk:Giffen good/Archives/2018

Complaint

The graphic needs to be corrected, for the two indifference curves plainly intersect as they are drawn. —Preceding unsigned comment added by 208.76.138.251 (talk) 14:30, 18 July 2008 (UTC)

Removed It's not hard to see why. It only takes a minute to think of a hyped product that is promoted by a higher than normal price. since this is an example of the demand changing because of advertising, which is not related to the price. Jrincayc 20:05, 28 Nov 2003 (UTC)

Moved from User talk:Jrincayc: I was intrigued by your argument at giffen goods where you say: However, since the actual good is 'high status' and not the wine (, perfume ...) the price of the 'high status' has not gotten cheaper, so goods like this are not usually considered giffen goods. This sounds like a tautology. It sounds like you are defining giffen goods out of existence. I can't imagine any good that could possibly be a giffen good given this explanation. As I see it, the arguement starts to go astray when you seperate the good into two characteristics (wine and status) and claim that it is really only one of these (status). But products cannot be decomposed in such a way (See Product (business). Any product is a bundle of characteristics, some physical and some symbolic. Has the price reduction reduced the image of the product to the extent that it is no longer the same product? Does the price reduction just reflect the reduction in perceived value (so that there is no effective change in price)? Maybe. But if we accept this arguement we must apply it to all products because value is always "perceived". If we do that, then there is no point in searching for giffen goods because we have defined them out of existence. Always interesting talking to you. mydogategodshat 00:23, 2 Dec 2003 (UTC)

Basically, what I meant is that the high status part of the wine decreased because of the price change, so that it is not the same good, so it will not be considered a true giffen good, since the good changed and not just the price. I did not mean to imply that it is only a status good and that the acual drinkable part had no influence on the price. The reason giffen goods are so rare (or non-existant) is that the only thing that changes can be the price, not the perceptions of the good, the good, income or anything else. Jrincayc 22:25, 3 Dec 2003 (UTC)

I would suggest an alternative explanation. The reason giffen goods are non-existant is because a change in price is going to change the perception of the good. There is no situation in which perception of value remains constant while price changes (because price is in the denominator of the value equation), therefore there can be no giffen good. We have defined them out of existance. mydogategodshat 08:45, 5 Dec 2003 (UTC)

I have been doing a bit of research, and the way that we have been using the term giffen good, while correct by some modern text books, is very different from the way Robert Giffen (1837-1910) originally intended. Giffen used it to refer not to a type of goods but to a situation. Here is a good quote: “a rise in the price of bread makes so large a drain on the resources of the poorer laboring families...that they are forced to curtail their consumption of meat and the expensive farinaceous foods; and , bread being still the cheapest food which they can get and will take, they consume more, and not less of it.” Although this applies to inferior goods only, I think we do Giffen a disservice by lumping them in with inferior and normal goods and income and substitution effects. Our microeconomic analysis hides the political statement the Giffen was making. Any comments? mydogategodshat 17:18, 3 Dec 2003 (UTC)

The history is quite interesting, I did not know that. I think it would be a good idea for you to add some of the history to the article. I think that the microeconomic analysis is useful, since it directly follows from the situation given. If the situation arises that someone sees a price increase and then we see that they buy more of the good with the price increase, then from the microeconomics, we know (and can prove with standard microeconomic assumetions) that the good is inferior, the good is using a large portion of their income, and that there are no good substitutes for the good. Jrincayc 22:25, 3 Dec 2003 (UTC)

From the normative position of microeconomic, your inferences certainly are sound. I think Giffen, however, would have said that the inferiority of the good, the large percentage of income, and the lack of close substitutes would be necessary preconditions for the existence of giffen goods (or more accurately for the existence of a situation in which people would purchase more of an appreciated good). Maybe these points are rather obscure "chicken and egg" questions that very few Wikipedians care about, but I would like your input before I make any changes to the article. mydogategodshat 09:09, 5 Dec 2003 (UTC)

Okay fine with me. Inferiority, large percentage of income, and lack of close substituse => possible giffen good. Giffen good => Inferiority, large percentage of income and lack of close substitues. As long as you make it clear that inferiority, lpoi, locs, are preconditions that do not guarenttee that it will be a giffen good, that is fine with me. Jrincayc 15:08, 5 Dec 2003 (UTC)

Why is large percentage of income a requirement for Giffen goods? Can you provide a source? The definition is income effect exceeding substitution effect; for goods representing a small share of income, both will be small, but why would that affect the relative standing? For example, if rice were a Giffen good and price rose, would only households who initially spent a large share of their income consume more rice, and others consume less? Or if thatched roofs are sufficiently inferior, and require rebuilding every so often but don't consume a large share of income, couldn't it be a Giffen good? They might be harder to measure, but still there. This claim at least seems dubious enough to me that it deserves a source on the main page. MaxGhenis (talk) 15:13, 24 February 2018 (UTC)

Slope and elasticity

The "analysis" section says "slope, which is constant in case of a straight demand function, must not be confused with price elasticity of demand, which varies depending on the point of the curve on which it is calculated and is not therefore constant even along a straight demand curve". Surely this is incorrect? On a straight demand curve, the elasticity is completely constant, as (% Change Q) / (% Change P) is the same at any point on a straight line. 82.132.231.215 (talk) 21:21, 9 March 2018 (UTC)