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There's a tale that potatoes during the Irish Great Famine were a giffen good (i.e. the the demand is higher at higher prices). Are there any real-world examples of giffen goods or are these theoretical curiosities?

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Try a momentum stock... –  Dirk Eddelbuettel Nov 4 '11 at 5:42
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... or vintage adidas sweatshirts in the late 90s in LA. –  RYogi Nov 4 '11 at 5:46
    
Touche! Sorry I meant to post this on the "SE econ" site did not realize I as on the Quant Exchange site. If someone have privileges to move this question there, that would be great! –  Quant Guy Nov 5 '11 at 15:30
    
I have read before that there is some doubt about even potatoes being a giffen good. –  Pablitorun Nov 18 '11 at 16:26
    
Would you still like this converted to community wiki? –  Turukawa Nov 28 '11 at 22:16
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3 Answers

Robert Jensen and Nolan Miller found that rice in a certain Chinese province is a Giffen good. Jensen described how he and Miller got the evidence on the freakonomics blog.

On the theory side, it should be noted that Giffen behavior is the result of a strong income effect with the right sign. Given goods have to be a large part of the expenditure of a consumer. It is also a partial equilibrium concept. John Nachbar argues that usual attempts to identify Giffen behavior do ignore general equilibrium effects and are therfore of little value.

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you posted a couple of well-received questions over on Area 51 Research Economics: "What are the strongest existence results for Markov Perfect equilibria in stochastic games?" and "What are the advantages of the distributional approach of Hart et. al. to modeling large economies?" - would you like to post each of them on this site as questions to be answered? –  EnergyNumbers Nov 26 '11 at 9:16
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You're asking for empirical examples of a Giffen good. Nonetheless, here is a recent article that explains how differing valuations of intermediate goods (inputs) can create Giffen demand for the final good.

Now, I suspect this behavior, to the extent that it does in fact exist in the real world, fails to show up as Giffen behavior in the market since this individual behavior is washed out by hundreds (to millions) of other demanders.

Update: For insight into why Giffen behavior is so hard to identify, consider the example of cable TV deregulation in Cowen and Tabarrok. In their chapter on monopolies, they note that cable TV prices went up steadily after deregulation, yet more and more people were subscribing to cable. Of course, the word Giffen never appears on the pages, because another factor---subscription quality---was increasing and driving demand up across the board. In a world were ceteris is rarely paribus, you'll have a hard time proving something is Giffen.

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This blog post argues (successfully in my opinion) that in certain situations money can be a giffen good.

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Thanks for the link to an excellent article! –  David Nov 9 '11 at 10:09
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