Not all Giffen Goods, are Inferior Goods
23 Pages Posted: 26 Mar 2021
Date Written: March 24, 2021
It is well known in the economic literature that the labor supply curve can bend backwards and, therefore, that leisure can be a Giffen good. It is also known that leisure can be a normal good. This article proves that if leisure is a Giffen good, it has to be a normal good. This result also proves that, contrary to common knowledge in economics, not all Giffen goods, are inferior goods. The results presented here could be taken into account, for example, when finding empirical evidence and designing policies on labor supply, in an era of machine learning and artificial intelligence.
Keywords: Leisure, labor supply, Giffen Goods, Ordinary Goods, Normal Goods, Inferior Goods
JEL Classification: D01, D04, D11, J22, J38
Suggested Citation: Suggested Citation