Principles of economethics from the Giffen demand

Abstract

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.

Keywords:

• Giffen demand
• inferiority condition
• agricultural commodities
• Spain
• ethics paradigm

JEL Classification::

• A12
• C15
• C80
• D01
• E22

Additional information

J. Agustín FRANCO. He is Dr and Associate Professor at the Economics Department in Faculty of Law in Cáceres. He was an Assistant Professor of Statistics at the University of Zaragoza from 2006 to 2009. He defended his Doctoral Thesis on Agrarian Economy at the University of Córdoba in March 2009. He is author of several papers in the field of natural resources conservation and agrarian sustainability. His research interests include applied economics from a critical approach, environmental economics and gender studies.