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Jensen, Robert T., and
Nolan H. Miller. 2008. "Giffen Behavior and Subsistence Consumption."
,
98(4): 1553-77.
Show Article Details
DOI: 10.1257/aer.98.4.1553
Abstract:This paper provides the first real-world evidence of Giffen behavior, i.e.,
upward sloping demand. Subsidizing the prices of dietary staples for extremely
poor households in two provinces of China, we find strong evidence of Giffen
behavior for rice in Hunan, and weaker evidence for wheat in Gansu. The data
provide new insight into the consumption behavior of the poor, who act as
though maximizing utility subject to subsistence concerns. We find that their
elasticity of demand depends significantly, and nonlinearly, on the severity of
their poverty. Understanding this heterogeneity is important for the effective
design of welfare programs for the poor. (JEL D12, O12)
Additional links:
Download Data Set |
Link to Appendix
Authors:
Jensen, Robert T. (Watson Institute for International Studies, Brown U)
Miller, Nolan H. (Harvard U)
JEL Classifications:
D12: Consumer Economics: Empirical Analysis
O12: Microeconomic Analyses of Economic Development
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