tag:blogger.com,1999:blog-5043138489010794057.post1096050126351008119..comments2024-03-27T15:57:09.192+05:30Comments on Urbanomics: Steve Levitt clarifies Giffen goodsUrbanomicshttp://www.blogger.com/profile/16956198290294771298noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5043138489010794057.post-52981332058400464462009-03-29T04:03:00.000+05:302009-03-29T04:03:00.000+05:30If the price of a cheap prostitute falls then we r...If the price of a cheap prostitute falls then we realsie we can consume the same as before and have money left to buy the services of a more expensive prostitute. We thus buy more of the expensive prostitute. When we buy more of the expensive prostitute we then need even less of the cheap prostitute and so...as the price of a prostitute falls we buy less.<BR/><BR/>Thus cheap prostitutes are a Giffen good.<BR/><BR/>If you agree with that analysis then the same would apply to many other products eg margarine.<BR/><BR/>Price of margarine falls, buy the same, use the surplus to buy butter. we now have more butter and the same margaraine thus we can reduce consumption of margarine and thus...margarine is a Giffen good....chris sivewrighthttps://www.blogger.com/profile/04037651343249715633noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-64796048742775283382009-02-02T04:23:00.000+05:302009-02-02T04:23:00.000+05:30I think you missed the point about prostitutes. T...I think you missed the point about prostitutes. They're saying some rich men, like the former Gov. of New York, aren't making economically rational decisions. Instead, they value a woman BASED on how much she charges, rather than solely on her looks. Anyone who's seen pictures of Pizer's woman would agree; she's hot, but not significantly more attractive that what's available for much less money.<BR/><BR/>The fact she is unavaible to middle class consumers makes her more desirable to those people. If that woman lowered her rate, her customers would change as those that demand the high-priced prostute would no longer buy.<BR/><BR/>It isn't a Giffin good in the since that rice is, but it is a good for some consumers, that defies the tradional utility curve.<BR/><BR/>The same could be said about high-end but completely unpratical and unreliable cars and all sorts of foolish stuff that the rich buy.Unknownhttps://www.blogger.com/profile/03609147448038861831noreply@blogger.com