DID YOU KNOW…
When Higher Prices Make You Buy MORE: The Giffen Good Paradox!
Economists discovered a rare phenomenon called a Giffen good, where, against the basic law of demand, people buy more of a product as its price rises. This counter-intuitive behavior typically occurs with staple goods consumed by very poor households.
Named after Scottish economist Sir Robert Giffen, who observed this pattern in 19th-century Ireland during the potato famine, a Giffen good is a specific type of inferior good. When the price of a staple like potatoes increased, poor families had even less money for expensive items like meat. To compensate, they were forced to buy more of the cheaper, now relatively more expensive, potatoes to meet their caloric needs. This effect is rare and requires specific conditions: a very low-income population, a significant portion of income spent on the good, and a lack of close substitutes.
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