Giffen paradox in the 21st century

Abstract

The article addresses the Giffen paradox as a significant aspect of the consumer choice theory, which receives considerable attention in microeconomics at introductory, intermediate and advanced levels of studies. The authors are expanding on a textbook interpretation of the Giffen paradox by analyzing the results of empirical studies conducted by R. Jensen and N. Miller early in the XXI century, as well as describing the “Giffen behavior” through characteristic preference approach and incorporating the subsistence constraint in the neoclassical theory of consumer choice. Drawing on the idea of maintaining a minimum level of consumption by relatively poor individuals, the article proves the unity of a textbook approach to explaining the “Giffen behavior” and its modern versions presented in scientific literature. The article can be useful to teachers and students of microeconomics, as well as to all those willing to get modern understanding of the Giffen paradox.