On the Existence of "Giffen Goods" again

2013 ◽  
Vol 380-384 ◽  
pp. 4521-4524
Author(s):  
Su Yu
Keyword(s):  
Marginal Utility ◽  
Diminishing Marginal Utility ◽  
Giffen Good

Whether Giffen goods exist or not has long been a argument in economics academic circle. This paper analyzes and evaluates the two opposing arguing points represented by Zhang Wuchang and Wang Dingding. At the same time, through analyzing in depth the explanation offered by Hicks Decomposition to Giffen goods in economics textbook,the paper points out that Hicks Decomposition to Giffen goods is against the axiom of Diminishing Marginal Utility, so that Giffen good is not likely to exist in reality.

scholarly journals The Giffen good — a praxeological approach

Ekonomia ◽  
2018 ◽  
Vol 24 (2) ◽  
pp. 9-22
Author(s):  
Walter E. Block ◽  
Igor Wysocki
Keyword(s):  
Marginal Utility ◽  
Demand Curve ◽  
Horizontal Axis ◽  
Real Problem ◽  
Diminishing Marginal Utility ◽  
Economic Good ◽  
The Law ◽  
Giffen Good

The Giffen good — a praxeological approachIn the present paper, we argue that the shape of any respectable demand curve must be monotonic non-increasing. By doing so, we follow the footsteps of Murray Rothbard, who regarded the demand curve as derived from the law of diminishing marginal utility. However, our caveat is that the horizontal axis must represent the units of the same economic good. Equipped with the notion of the same economic good, we also argue that Giffen or Veblen goods do not pose any real problem for analysis. Rather, they behave as any other good — that is the demand curve for them is also and necessarily downward sloping.

Income or Culture? Examining the Determinants of Subjective Wellbeing in an International Sample

2019 ◽  
Author(s):  
Siddharth Garg
Keyword(s):  
Online Survey ◽  
Subjective Wellbeing ◽  
Regression Coefficient ◽  
Marginal Utility ◽  
Economic Class ◽  
Income Groups ◽  
Significant Difference ◽  
The World ◽  
Diminishing Marginal Utility ◽  
The Relationship

Objective: The aim of this paper was to examine the relationship between income, subjective wellbeing, and culture among people from a higher socio-economic class across the world. Rationale: Ed Diener proposed the law of diminishing marginal utility as an explanation for differences in subjective wellbeing among different income groups across different countries (Diener, Ng, & Tov, Balance in life and declining marginal utility of diverse resources, 2009). Thus, people with higher incomes would experience less subjective wellbeing due to income, and culture should emerge as a significant predictor. Method: Data from this study came from another study (https://siddharthgargblog.wordpress.com/2019/07/14/love-for-money/). I used an online survey to collect data on annual income in US dollars, subjective wellbeing (WHO-5), and country of residence (Indicator of Culture). 96 responses (Indians = 24, Foreigners = 72) were entered in IBM SPSS and a regression analysis was conducted. The raw dataset used in this study can be found at https://doi.org/10.6084/m9.figshare.8869040.v1Results: ANOVA showed a significant difference (p < 0.05) between Indians and foreigners on levels of subjective wellbeing. Linear regression shows the regression coefficient of culture to be significant (Beta = -.254, p = .014) but the regression coefficient of income was not found to be significant. The overall model was found to explain 8.2% of the variance in wellbeing.Conclusion: The sample of this study is too small to make any kind of generalization; it does lend a little bit of support to the idea of diminishing marginal utility of income on subjective wellbeing and provides a rationale for further research.

scholarly journals The Shapiro-Stiglitz Model with Non-constant Marginal Utility

2017 ◽  
Vol 1 (1) ◽  
pp. 36-48
Author(s):  
Joseph S. K. Wu ◽  
Chi Pui Ho
Keyword(s):  
Utility Function ◽  
Unemployment Rate ◽  
Marginal Utility ◽  
Efficiency Wage ◽  
Generalized Model ◽  
Factors Affecting ◽  
Secular Decline ◽  
Diminishing Marginal Utility

Abstract The Shapiro-Stiglitz model plays an important role in the employment theory. Woodford pointed out the theoretic limitation of the linear worker's utility function in that model. He questioned the model's implication of the secular decline in the unemployment rate when such rate was in fact trendless. He proposed to resolve this by allowing diminishing marginal utility of income. In this paper, the Shapiro- Stiglitz model is generalized using a nonlinear utility function implicit in the Stiglitz Efficiency-wage paper, thus linking these two well-known models. The nonlinear utility function in this generalized model not only allows for diminishing marginal utility of income but also allows for the analysis of parameters representing various factors affecting the secular unemployment rate. In particular, we can specify the condition under which the diminishing marginal utility can cause such rate to be trendless.

scholarly journals The Nature of Risk Preferences: Evidence from Insurance Choices

2013 ◽  
Vol 103 (6) ◽  
pp. 2499-2529 ◽  
Author(s):  
Levon Barseghyan ◽  
Francesca Molinari ◽  
Ted O'Donoghue ◽  
Joshua C Teitelbaum
Keyword(s):  
Loss Aversion ◽  
Structural Model ◽  
Marginal Utility ◽  
Unobserved Heterogeneity ◽  
Risky Choice ◽  
Probability Weighting ◽  
Disappointment Aversion ◽  
Diminishing Marginal Utility ◽  
Standard Risk ◽  
Small Probabilities

We use data on insurance deductible choices to estimate a structural model of risky choice that incorporates “standard” risk aversion (diminishing marginal utility for wealth) and probability distortions. We find that probability distortions—characterized by substantial overweighting of small probabilities and only mild insensitivity to probability changes—play an important role in explaining the aversion to risk manifested in deductible choices. This finding is robust to allowing for observed and unobserved heterogeneity in preferences. We demonstrate that neither Kőszegi-Rabin loss aversion alone nor Gul disappointment aversion alone can explain our estimated probability distortions, signifying a key role for probability weighting. (JEL D14, D81, G22)

Diminishing Marginal Utility Revisited

2015 ◽  
Author(s):  
Miles S. Kimball ◽  
Fumio Ohtake ◽  
Daniel H. Reck ◽  
Yoshiro Tsutsui ◽  
Fudong Zhang
Keyword(s):  
Marginal Utility ◽  
Diminishing Marginal Utility

Diminishing Utility Decision Model for Weighting Criteria

2015 ◽  
Vol 14 (06) ◽  
pp. 1263-1284 ◽  
Author(s):  
Jih-Jeng Huang ◽  
Masahiro Inuiguchi
Keyword(s):  
Analytic Hierarchy Process ◽  
Decision Model ◽  
Marginal Utility ◽  
Analytic Network Process ◽  
Analytic Hierarchy ◽  
Numerical Examples ◽  
Absorbing State ◽  
Network Process ◽  
Diminishing Marginal Utility ◽  
Hierarchy Process

The analytic hierarchy/network process (analytic hierarchy process (AHP)/analytic network process (ANP)) became the most popular tool for weighting criteria in the field of multiple criteria analysis during the 1980s. However, these models often suffer from criticisms because of their theoretical and practical problems. In this paper, the diminishing utility decision model (DUDM) is proposed in order to retain the pros and avoid the cons of the AHP and ANP for weighting criteria. The DUDM integrates the AHP and the concept of diminishing marginal utility in order to model the main and interaction weights of criteria, respectively. From the results of the numerical examples, it can be seen that the proposed method can solve two major limitations of the ANP. First, the proposed method can significantly reduce the number of questions that are asked in the ANP. Second, the proposed method can ensure convergence in many situations and avoid the problem of the ANP with regard to the absorbing state.

Do Good Things Come in Small Packages? Bottle Size Effects on Willingness to Pay for Pomegranate Wine and Grape Wine

2017 ◽  
Vol 12 (1) ◽  
pp. 84-104 ◽  
Author(s):  
Andreas C. Drichoutis ◽  
Stathis Klonaris ◽  
Georgia S. Papoutsi
Keyword(s):  
Willingness To Pay ◽  
Size Effects ◽  
Marginal Utility ◽  
Signal Quality ◽  
Quality Changes ◽  
Sweet Wines ◽  
Negative Effect ◽  
Grape Wine ◽  
Diminishing Marginal Utility ◽  
Jel Classifications

AbstractWe evaluate the claim that bottle size formats signal quality changes by performing a controlled laboratory experiment in which we simultaneously auction two different sweet wines: a pomegranate wine and a grape wine. We vary the size of the bottle from 500 mL to 750 mL between participants, but we keep the amount of wine constant across the bottle sizes. We also explore the effect of expectations for the wines, blind tasting, and information about wine attributes on people's willingness to pay (WTP). For both wines, we find evidence consistent with diminishing marginal utility; for the pomegranate wine, we find a premium for the smaller bottle size, which is consistent with changes in the wine's perceived quality. We also find that information is adequate in offsetting the negative effect of the tasting treatment. (JEL Classifications: C23, C24, C91, D12, M31)

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