Ability to purchase goods. This goes down if price goes up.
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yes they do or you just buy less
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You mentioned rice as prototypical Giffen good. In what sense does increasing the price of rice make rice less efficient? It certainly does not change the nutritional attributes of the rice.
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right, it's the same rice for more money, hence less efficient.
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Oh, I see. I think you are conflating high value with high diminishing marginal returns. As prices of each rise, value/$ spent on Veblen goods rises, and it takes more $ to reach diminishing marginal returns on Giffen goods. These effects are not in conflict.
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the Giffen paradox is about the income effect. if your value/$ spent is going up, the income effect is in the wrong direction
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when the price of a veblen good goes up people buy more of it because it's a better deal. people getting better deals are richer not poorer
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No, the income effect is about amount of $ available, not value/$.
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You need some X. Price of X goes up, making you unable to afford expensive signalling good Y, motivating you to buy more X as an (inferior to Y) signal of wealth. Simultaneously, higher price of X improves it as a signal, also motivating you to buy more. X is Giffon and Veblen.
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