Giffen behavior and subsistence consumption

Robert T. Jensen, Nolan H. Miller

Research output: Contribution to journalArticlepeer-review


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.

Original languageEnglish (US)
Pages (from-to)1553-1577
Number of pages25
JournalAmerican Economic Review
Issue number4
StatePublished - Sep 2008
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics


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