One might think this stays constant if price and value of goods rise proportionally, but increases in value of conspicuous consumption goods typically is relative to the value of substitutes, and ability to extract value from goods in general does not increase along with price.
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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but X is now better as a signal of wealth than it was, so I don't need as much of it, so I can still buy Y.
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if my money commands more value that's effectively income, even if my nominal dollars remain the same.
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