Giffen good

Definition

Consumer item having the paradoxical quality of being in greater demand when its price rises, and lower in demand when the price falls. Typically, a giffen good (such as corn in 19th century England and the alcoholic beverage 'shochu' in modern Japan) is one considered 'essential' by a section of consumers. As its price increases, the consumers have to spend a greater portion of their income to maintain the same level of consumption. Since they cannot now afford the more expensive substitutes, they end up buying more of the same good. The opposite happens when its price falls. Named after the UK economist Sir Robert Giffen (1837-1910) who first studied and reported this paradox.