In reply to Harry Veeder's message of Wed, 30 May 2007 13:41:29 -0500: Hi, [snip] >On 29/5/2007 12:01 AM, Robin van Spaandonk wrote: > >> In reply to Harry Veeder's message of Mon, 28 May 2007 21:17:21 -0500: >> Hi, >> [snip] >>> <<Marshall wrote in the 1895 edition of Principles of Economics: >>> As Mr. Giffen has pointed out, a rise in the price of bread makes so large a >>> drain on the resources of the poorer labouring families and raises so much >>> the marginal utility of money to them, that they are forced to curtail their >>> consumption of meat and the more expensive farinaceous foods: and, bread >>> being still the cheapest food which they can get and will take, they consume >>> more, and not less of it.>> >>> >>> >> That may well be true, however I suspect that if the price of bread went up >> to >> that extent, then probably the price of everything else did as well. >> >> Regards, >> >> Robin van Spaandonk >> >> The shrub is a plant. >> > > >Your position is a giffen good only exists a mistake of interpretation. >
Not quite. Giffen suggested that people bought more bread because the price of bread went up. I'm saying that the more likely reason is that the price of everything went up, and they only had money for bread, which was still cheaper than everything else. If only the price of bread had gone up, then they would likely have shifted to e.g. potatoes, which would then have been relatively cheaper. > >Westerners have become so dependent on oil consumption that we will continue >to buy more of it even as the price rises. This is only true to some extent, see Jed's reply. >It is too late to expect rising >oil prices to reduce the demand for oil. People complain and complain about >the price but still the demand rises. Is the demand rising in the US? World wide it certainly is, but I think this is primarily a consequence of the economic boom in India and China resulting in lots more people being able to afford cars. > >Reducing the demand for oil will require government supported and _mandated_ >technological shifts. The demand for oil will drop when a cheaper alternative becomes available. Regards, Robin van Spaandonk The shrub is a plant.
