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International audience; Theoretical models often assume the environment to be a normal good, irrespective of one’s income. However, a priori, nothing prohibits an environmental good from being normal for some individuals and inferior for others. We develop a conceptual framework in which private consumption and an environmental public good act as substitutes or complements for satisfying different needs. Subsequently, the environment can switch between normal and inferior depending on one’s income and environment and corresponding prevalent needs. If the environment is inferior for some range of income, then the willingness to pay for environmental preservation becomes non-monotonic with respect to income. We discuss the relevance of our framework in the context of (income-adjusted) unit benefit transfers, dual-rate discounting and the Environmental Kuznets curve.

The article is devoted to the construction and analysis of the simplest mathematical model illustrating the Giffen’s effect and the reasons and conditions for its manifestation. We analyse erroneous, but widely spread, ideas about Giffen’s goods as a good, the demand for which grows due to its relative cheapening against the rising prices for all consumed goods. Under the model it is shown that any good can be both valuable and of little value, at least if it has a more expensive substitute. This property is not an intrinsic and inalienable property of one or another good. The certain property is given to any good by a specific consumer due to its personal preferences and under the influence of existing prices. Inferior good, including such, the consumption of which is available only to an individual with a high level of income, may turn out to be a product of Giffen. Therefore, the consumption of Giffen goods cannot be considered as evidence of a low standard of living for the consumer. Because of the solution of the standard task on the consumer choice, it is shown that the increase in demand for an inferior good when its price is growing, which is the essence of the Giffen paradox, is the result of optim. It is shown that for the manifestation of the Giffen effect it is necessary that the amount of funds allocated by the consumer for acquiring low value good and its more expensive substitute gets into a certain rather narrow range of values.

During recessions, households may face unemployment, retirement, and/or lower income. These changes can induce an increase or decrease in recreation demand, depending upon whether recreation is a normal or inferior good. Further, income changes lower the opportunity cost of time devoted to recreation, potentially inducing increases in recreation activity. The net effect of these recessionary forces is an empirical question that has received little attention to date. Utilizing a unique panel comprising both prerecession and during-recession data on household employment, recreation usage, and socioeconomic variables, we investigate how changes in employment status during the recession alter lake-based recreation demand.

Rapid income growth and urbanisation could significantly change the composition of the food basket in many emerging economies. This study estimates a demand system, including 15 major food items in Vietnam, with multiyear household survey data. We find a large variation in the estimated price elasticities (–0.05 to –0.88) and expenditure elasticities (–0.16 to 2.56). Food types, urban status and income groups can explain this variation. We also find that the staple food, rice, is already an inferior good for rich urban households in Vietnam. Moreover, food preferences are evolving away from rice but towards animal proteins (fish, pork, chicken, eggs and milk), fruits and vegetables, irrespective of urban status and income groups. As the Vietnam economy continues to grow with a doubling of gross domestic product (GDP) in the next decade, per capita rice consumption in both urban and rural areas and across different income groups will continue to decline, whereas demand for other high‐value products will rise. Thus, government policy should focus on encouraging demand‐oriented food production. In addition, crop diversification at the farm level needs to improve substantially to meet the rising demand for these food products due to income growth and urbanisation.

The objective of this paper is to assess the equilibrium relations in the fresh nut, oil and Desiccated Coconut (DC) market in Sri Lanka with special emphasis on determining the supply and demand elasticities. To achieve this objective, the Partial Equilibrium Model (PEM) previously adopted for the Sri Lankan coconut industry was reestimated using Seemingly Unrelated Regression (SUR) method. Annual data on prices, quantities and other supply and demand related data for the period 1956-2017 were used for the analysis. The PEM captures the linkages in both production and consumption between the three markets. The results revealed that estimations are consistent with previous studies except for the income variable in demand equations for both fresh and oil markets where only the latter is statistically significant with negative coefficient indicating that oil has become an inferior good. Both the own price elasticity of supply and demand of fresh nut and oil were statistically significant with comparatively lower magnitudes whereas it was significant and higher in the DC market. When compared with the previous studies, the findings of the present study revealed that the magnitudes of the supply and demand elasticities in all three coconut markets have changed over the past decade and implications of those changes are further observed in the changes of directions of supply and demand relationships. Therefore, the coconut market model may also be extended further by incorporating other important sub-sectors as well.

International audience; We introduce a class of differentiable, strictly increasing, concave utility functions exhibiting an explicit demand of a good which may have Giffen behavior. We provide a necessary and sufficient condition (based on prices and consumers’ preferences and income) under which this good is normal, inferior or Giffen. A general equilibrium analysis is also provided.

This paper studies the effect of passive smoking on child development. We use data from a time when the adverse effects of smoking on health were not known and when tobacco was not an inferior good. This allows us to disentangle the effect on foetuses and infants of smoking from that of other indicators of social and economic conditions. We exploit a set of unique longitudinal historical datasets defined at a detailed level of geographical disaggregation, namely the 69 Italian provinces. The datasets record precise information on the per capita consumption of tobacco products, the heights of twenty-year old conscripts in the second half of the 19th century Italy, and other relevant controls. We find a strong negative effect of smoking in the period immediately before and after birth on the height at age 20. Results are robust to changes in specification and consistent across the height distribution.

Despite an extensive empirical literature on the determinants of cultural consumption, few studies focus on the demand for popular forms of culture (i.e. reality television, popular music, yellow journalism, among the others). The purpose of this paper is to fill this lacuna by analysing the market for circus, a worldwide popular performing art. To this aim, a demand–supply model is investigated using data on 107 Italian provinces over the period 2006–2007, by applying the SUR and the 3SLS methodologies. Findings confirm the economic theory, since price is negatively correlated with the quantity demanded and positively with the quantity supplied. According to our results circus is an inferior good. This result show that high and popular culture are far from competing each other. Cinema, theatre and concerts turn out to be feeble substitute goods for circus. Circuses in the South and Islands of Italy are characterised by longer stays in a single location probably due to higher appreciation for circus performances and favourable climate conditions. Since the determinants of popular culture demand are find to be different from those of high culture, our findings can be useful for policy makers to implement policies finalised to social inclusion and social cohesion.

China's residential sector has experienced rapid electrification and gasification. Among rural households, however, coal still accounts for a large share of energy use, especially in the north. Use of coal for cooking and heating brings large health and pollution risks. From a theoretical viewpoint, economic tools such as taxes and subsidies have the potential to play a crucial role in addressing this issue. In this paper, a provincial-level dataset is used to estimate the price and income elasticities of aggregate coal demand by rural households. We find that coal is a non-Giffen inferior good for the rural household sector. This means that future income growth may help to induce switching from coal. Demand is becoming more price elastic as rural incomes grow. We also find that rural residential coal demand is more price- and income-responsive in the south than the north, perhaps because of fewer substitution options in the north. Our results provide benchmarks and parameters for policy simulation research.

Istraživanje provedeno u ovom radu je imalo nekoliko ciljeva. Cilj je bio segmentirati kupce, provjeriti je li kruh na hrvatskom tržištu inferiorno ili Giffenovo dobro te utvrditi determinante potražnje za kruhom. Istraživanje je pokazalo kako jako mali postotak ispitanih, tek 6,33%, ne kupuje kruh. Nadalje, ustanovilo se kako kruh na hrvatskom tržištu nije ni inferiorno dobro, ni Giffenovo dobro, već osnovno dobro koje se većinom svakodnevno konzumira. Stoga, ne čudi kako se ni dohodak ni cijene nisu pokazale značajnim determinantama potražnje za kruhom. Što se tiče ostalih determinanti, ustanovilo se kako razina tjelesne aktivnosti i razina obrazovanja značajno utječu na potražnju za kruhom te da oni koji se bave nekim oblikom tjelesne aktivnosti potražuju manje kruha u odnosu na one koji se tjelesnom aktivnosti uopće ne bave. Nadalje, pokazalo se kako oni obrazovaniji potražuju manje kruha u odnosu na one niže obrazovane. The research carried out in this paper had several goals. The goal was to segment customers, check whether bread on the Croatian market is inferior or Giffen's good, and determine the determinants of the demand for bread. The survey found that a very small percentage of those surveyed, only 6.33%, do not buy bread. Furthermore, it was found that bread on the Croatian market is neither inferior nor Giffen's good, but a staple good that is consumed mostly every day. Therefore, it is not surprising that neither income nor prices have proven to be significant determinants of the demand for bread. As for other determinants, it was found that the level of physical activity and the level of education significantly affect the demand for bread and that those who engage in some form of physical activity consume less bread compared to those who do not engage in physical activity at all. Furthermore, it turned out that the more educated consume less bread compared to the lower educated.

Structural vector auto-regressions (SVARs) are used to simulate US carbon taxes, treating price plus tax as exogenous. These reduce CO2 and GDP. If this fall in GDP is compensated to leave Disposable Income unchanged, the added income drives further declines in CO2, but also lower GDP. Carbon-heavy GDP is thus seen to be an inferior good for the US, falling as Disposable Income increases.

How does immigration affect incomes in the countries migrants go to, and how do rising incomes shape emigration from the countries they leave? The answers depend on whether people who migrate have higher or lower productivity than people who do not migrate. Theory on this subject has long exceeded evidence. We present estimates of emigrant selection on both observed and unobserved determinants of income, from across the developing world. We use nationally representative survey data on 7,013 people making active, costly preparations to emigrate from 99 developing countries during 2010–2015. We model the relationship between these measures of selection and the income elasticity of migration. In low-income countries, people actively preparing to emigrate have 30 percent higher incomes than others overall, 14 percent higher incomes explained by observable traits such as schooling, and 12 percent higher incomes explained by un-observable traits. Within low-income countries the income elasticity of emigration demand is 0.23. The world’s poor collectively treat migration not as an inferior good, but as a normal good. Any negative effect of higher income on emigration within sub-populations can reverse in the aggregate, because the composition of sub-populations shifts as incomes rise an instance of Simpson’s paradox.

The Iraqi Public Distribution System is the largest universal, in-kind subsidy system in the world. In 2012, the Public Distribution System transfers accounted for as much as 30 percent of incomes of the poorest 10 percent of the Iraqi population and provided 70 percent of the calories of the poorest 40 percent. In effect, the Public Distribution System remains the only safety net program that covers all the poor and vulnerable in the country. Yet, it is a very inefficient and expensive means to deliver transfers to the poor and creates distortions in the economy as well as an unsustainable fiscal burden. The fiscal crisis since mid-2014 has put reform of the Public Distribution System back on the agenda. This paper employs a mixed demand approach to analyze the consumption patterns of Iraqi households and quantify the welfare impact of a potential reform of the Public Distribution System in urban areas. The results show that household consumption of Public Distribution System items is relatively inelastic to changes in price. Consumption is more inelastic for the poorest quintiles and, for much of the population, these goods are not inferior, but rather normal goods. Cross-sectional comparisons suggest that with improvements in welfare levels, and with well-functioning markets, some segments of the population are substituting away from the Public Distribution System and increasing their consumption of market substitutes. The removal of all subsidies will require compensating poor households by 74.4 percent of their expenditures compared with nearly 40 percent for the richest households in urban areas.

Leisure consumption has been increasing in the United States since the 1960s. Over the same period, inactive lifestyles have contributed to adverse health outcomes. We propose a new way of categorizing leisure into groups based on the amount of physical exercise needed. Our results show that physically active leisure is a normal good whose demand rises with education and health, while physically passive leisure is an inferior good whose demand rises with lower education and poorer health. These patterns allow us to propose a taxonomy that categorizes various leisure activities into ‘Active’ and ‘Passive’ groups.

The U.S. fluid milk market has been experiencing two trends in the recent decade: the fast growth of private label milk and organic milk. Using the data from Nielsen Homescan Panel, we estimate a censored demand system to study the demand relations among types of milk differentiated by brand types and organic status. We find that sociodemographic factors still play important roles in household choice of milk types, and fluid milk, as a whole, is an inferior good. Moreover, as income increases, households are more likely to shift from buying conventional milk to organic milk and from private label conventional milk to branded conventional milk, as indicated by the asymmetric cross price elasticities. Corresponding implications for milk producers and marketers are discussed.

This study investigates and estimates long-run time-varying income and price elasticities of oil demand in Brazil, Russia, India, China, and South Africa (BRICS). A time-varying cointegration (TVC) approach allowing for the smooth changes in the parameters is employed, using quarterly data covering the period from 1990:Q1 to 2018:Q4. TVC tests confirm the variation in the long-run parameters over time for all countries by rejecting the null hypothesis of time-invariant cointegration. Moreover, results reveal that time-varying parameters of income and oil prices are inelastic for all counties' oil markets. BRICS's oil demand is significantly affected by the real economic activity, although the evidence on inelastic income implies oil as a necessary commodity. The sign of time-varying price elasticities implies oil as an ordinary good for Brazil, Russia, and China whereas an inferior good in some intervals for India and South Africa. The evidence on the insignificance of price elasticities in most of the analysis periods indicates that regulation of oil product prices cannot control domestic oil demand. Hence, one can infer that taxes imposed on petroleum product prices are not an effective policy instrument to reduce greenhouse emissions. (c) 2021 Elsevier Ltd. All rights reserved.

Weber (The Manchester School, Vol. 69 (2001), No. 6, pp. 616–622) has asserted that if we treat the production function of Epstein and Spiegel (The Manchester School, Vol. 68 (2000), No. 5, pp. 503–515) as a utility function, then an inferior good exhibits Giffen behavior at certain prices and income levels. This paper shows that it is not correct. Furthermore, we develop a geometrical method (i) to identify a region in a consumption set where Giffen behavior appears, (ii) to show that Giffen behavior can be categorized into two types: ‘subsistence‐driven’ and ‘satiation‐driven’, and (iii) to present a new class of Giffen utility functions.

Purpose The purpose of this paper is to explore factors affecting secondhand clothing acquisition among a sample of US female consumers based on an economic perspective. Design/methodology/approach This research is descriptive in nature, utilizing a survey of 500 US female consumers to explore relationships between five modes of secondhand clothing acquisition and selected consumer characteristics. Logistic regression was used to analyze the data. Findings The significant variables were income, age, number of toddlers and children ages 6-17 present in households, and sewing and repair skills. Income was found to be negatively related to purchasing secondhand clothing, suggesting that consumers view used clothing as an inferior good. Consumers in Gen Y were more likely to be involved in various means of secondhand clothing acquisition, holding income constant, than Baby Boomers. Practical implications Overcoming the stigma of inferiority associated with secondhand clothing, encouraging repair skills, and the repair of clothing, reaching out to consumers to build on their interest in DIY projects, and utilizing new technology (e.g. apps for sharing clothes) are practical implications. Originality/value The paper examined multiple modes of clothing acquisition rather than a single mode, and contributes insight regarding the economic concept of secondhand clothing as an inferior good.

The latest Census survey driven by the Brazilian Institute of Geography and Statistics (IBGE) shows that the income groups having the smallest commuting time in the city of Recife are those with the lowest and the highest incomes. This paper tries to find reasons behind that behavior for the groups with lowest income by using data from focus groups interviews in low-income areas of the city. Census data is from 2010, the interviews were held in the end of 2011. Results show that the poorest people in Recife cannot afford to use public transportation, restricting their activities to places that can be reached by foot or, in some cases, riding bicycles. Even though those people are not isolated in far suburbs, as it happens in many cities from many countries, the lack of access to public transport can also drive to isolation by creating restraints for participation in social-economic activities and, in this paper specifically, to work opportunities. Public transportation is usually seen as accessible to all: in economic theory it is even considered an example of inferior good; however, in this city, it may be a luxury item to a considerable part of the population.

Thisstudy analyzes the neoclassical theory on the demand for children. Neoclassicaltheory assumes that child demand is not different from a commodity demand. Theneoclassical theory takes child demand in the utility function, like any othercommodities. But, the demand for children is different from things whichincrease our utility; such as car, refrigerator, elevator, and other goods andservices, whose price is determined in the market through its sellers andbuyers. However, demand for children is determined by socio-cultural things. Itis certain that there is a relationship between economic growth and childrearing. For example, economic growth raises the cost of children due the timespent on child care becoming more valuable. But it cannot be called "childdemand is an inferior good"., Buçalışma neoklasik teoriyi çocuk talebi üzerine analiz etmektedir. Neoklasikteori çocuk talebinin herhangi bir mal talebinden farksız olduğunuvarsaymaktadır. Bu bakış açısından hareketle çocuk talebi, diğer tüm mallargibi, fayda fonksiyonu içerisine dahil edilir. Ne var ki çocuk talebi faydamızıartıran araba, buzdolabı, asansör ve diğer mal ve hizmetlerden farklıdır, zirabu tür malların fiyatları piyasada satıcılar ve alıcılar tarafından belirlenir.Çocuk talebi ise sosyo-kültürel gerçeklikler tarafından tayin edilir. Ekonomikbüyüme ve çocuk yetiştirme arasında bir ilişki olduğu muhakkaktır. Örneğin,iktisadi büyümeyle birlikte çocuğa ayrılan vakit daha değerli hale geldiği içinçocuk maliyetini de artırmıştır. Yine de bu sonuç çocuk talebinin bir düşük malolduğunu göstermez.

This article re-examines three standard results in the theory of insurance demand: (i) full coverage with a fair premium and partial coverage with an unfair premium; (ii) insurance is an inferior good under decreasing absolute risk aversion (DARA) and (iii) insurance may be a Giffen good under DARA. It has been shown recently that (i) holds for the class of insurance policies in which maximum coverage fully covers the potential loss. We show that whether (i) holds beyond this class of policies is indeterminate. In addition, we employ a unified framework to investigate the effects of changes in initial wealth and price. In particular, we show that both (ii) and (iii) hold for a certain class of insurance policies which include all commonly-used types of policies. The result also provides a unified treatment of several results in the extant literature.

Groundwater in the Mekong Delta is facing the pollution, and it needs to be protected. Applying the contingent valuation method, the mean willingness-to-pay estimate by probit model was 8.86 USD per household per year. Groundwater could be an inferior good in the Delta with the negative income effect found in the demanding for clean groundwater. There were eight statistically significant variables, including both exogenous and endogenous, related to a respondent’s WTP response, while there were only four statistically significantly exogenous variables affecting the maximum offer price a respondent voted for in the OLS model. Respondent’s gender and groundwater-related health risk consideration were factors sensitively affecting the WTP values. Household income had a positive effect on the probability of demanding for groundwater protection.

Indonesia is the largest coffee producer in the world after Brazil, Vietnam and Colombia, but it was confronted with market problems. This paper, therefore, analysed the demand system as the position market for Indonesian coffee, either green bean or roasted coffee in the main importing countries such as Germany, Japan and The United States. The linear Approximate Almost Ideal Demand System (LA/AIDS) model was used to analyse the position of Indonesian coffee and its competitors. Time series data from 1996 to 2017 were obtained for the analysis. Empirical results indicated that most of the slope coefficients were statistically significant and in accordance with microeconomic theory. The variables of trade policy effected the Indonesian coffee trade. Indonesian green bean was found to be elastic in Germany, Japan, and The United States. Then, Indonesian roasted coffee was found to be inelastic in Japan. Indonesian green bean was a luxury good only in Germany, but Indonesian roasted coffee was an inferior good in Germany and The United States. Both Indonesian green bean and roasted coffee were a necessity in Japan. Almost Indonesian coffee substitute for Brazilian coffee and Colombian coffee, and complementary with Vietnamese coffee as its competitor.

Using regression analysis, 41 years of charitable giving and income data was evaluated to determine if charitable giving is a luxury, normal, or inferior good, and to determine the income elasticity for separate nonprofit sectors. Total Giving to the nonprofit subsector as well as most nonprofit sectors (Religion, Education, Human Services, and Environment) is a normal good, while Arts and International giving are likely luxury goods. However, evidence suggests that Health and Public Benefit are likely inferior goods. This research makes three contributions. First, it offers quantitative data as evidence in the supply-side and demand-side debates. Second, owing to income elasticities, researchers propose the Philanthropic Sphere of Influence and postulate that as incomes rise, donors are more likely to give to causes from which they are less likely to personally benefit. Third, by evaluating charitable giving as a whole and then by each subsector, the research demonstrates that each nonprofit subsector responds uniquely to changes in income. Therefore, nonprofit sectors should be evaluated separately.

The paper empirically examines old-age security hypothesis to explain fertility rates in South Asia. Panel data is used for the period 1972–2013 for seven South Asian countries which include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The estimated results reveal that in South Asia fertility rate decreases with the increase in financial development. Thus, the findings support old-age security hypothesis that parents use children as financial instruments to secure their old age. This paper validates the theory that the availability of alternative financial tools reduces the incentives of households to have large offspring. Infant mortality is also shown an important factor for high fertility rate in South Asia. This implies that households cover their risk from losing children by producing more children. The results also reveal that fertility rate decreases with the increase in per capita income, which implies that households treat children as inferior good in this region. In other words, households prefer quality of children over quantity of children when their income level increases. The results have also shown that fertility decreases with the increase in education, urbanization, agriculture productivity and industrialization. The study has some important policy implications.

The article studies the demand for public transport in Colombian cities, identifying the main determinants explaining market shares for transit services. We used aggregated choice models to estimate overall price, income, speed and frequency elasticities for urban public transport demand in the country. The model successfully accounts for unobservable information about attributes of alternative public transport modes. The results suggest high demand elasticities to price and frequency, while demand responds moderately to speed. We also find a negative income elasticity, which classifies public transport as an inferior good. Results provide relevant information for the current discussion about new transport systems in cities of developing countries, with a deeper understanding of the elements to consider in the design of public transport policies. © 2020 Elsevier Ltd

This article investigates the links between forests and poverty in India. We use original data from a household survey in two states of India (Madhya Pradesh and Chhattisgarh) to provide new insights into this relationship. The poorest are found to receive about 30% of their incomes from forests – an amount that is higher than the income that they obtain from agriculture. We identify the correlates of greater environmental and forest income in the sample and also seek to examine whether environmental incomes are used only as a safety net during disasters, or for basic consumption purposes too. Our results show that when negative shocks occur there is a higher relative dependence on environmental incomes. The results also suggest that those who are better-off obtain higher levels of environmental income that the poorer. Overall the findings are consistent with environmental incomes and other sources of incomes being complements. In sum, the results suggest that forest income is used for basic consumption, is not a substitute for other sources of income, and is not treated as an “inferior good” that is eschewed by richer groups in the survey.

This paper considers the relationship between healthcare expenditure (HCE) and gross domestic product using Baltagi and Li (Ann Econ Financ 3:103–116, 2002) semiparametric fixed effects regression estimator in a sample of 16 MENA countries over the 1995–2012 period. Findings indicate that income elasticity is not consistent but varies with income level and healthcare is a necessity for the non-oil rich countries (non-GCC) whereas it is an inferior good for the wealthiest countries in MENA; Qatar, United Arab Emirates (UAE) and Kuwait. Furthermore, it is found that the infant mortality rate per 1000 live births has a negative effect on per capita HCE in non-GCC countries and the proportion of the population age 65 and above is statistically significant in Bahrain, Oman and Saudi Arabia.

Using the contingent behavior method, we estimate the benefits derived from the biomitigative effects of Integrated Multi-Trophic Aquaculture (IMTA) in the farming of Atlantic salmon. We asked a sample of Canadians how their farmed Atlantic salmon consumption choices would be affected by the availability of IMTA products in response to the decreased external costs they would impose on the surrounding marine environment. We used a random-effects negative binomial model to estimate their different demand functions and, from them, measures of increases in consumer surplus arising from the availability of IMTA products. We estimated a lower bound for the aggregate benefit that current salmon consumers in Canada would derive from the introduction of IMTA salmon of about CAD 280 million/year, while less restrictive assumptions about the representativeness of our sample would lead to an aggregate figure of about CAD 1.5 billion/year. We also found that consumers would benefit from proper labeling of farmed salmon, since conventionally farmed salmon and IMTA salmon are considered non-substitutes, the latter being a normal good and the former an inferior good for the typical consumer. We find that there is room for improving welfare by disseminating information to enhance consumer understanding of IMTA production techniques.

Nowadays, obesity and being overweight are among the major global health concerns. Many, diet-related diseases impose high tangible and intangible costs, and threaten the sustainability of health-care systems worldwide. In this study, we model, at the macroeconomic level, the impact of energy intake from different types of carbohydrates on the population’s BMI (body mass index). We proceed in three steps. First, we develop a framework to analyse both the consumption choices between simple and complex carbohydrates and the effects of these choices on people health conditions. Second, we collect figures for 185 countries (over the period 2012–2014) regarding the shares of simple (sugar and sweetener) and complex (cereal) carbohydrates in each country’s total dietary energy supply. Third, we use regression techniques to: (1) estimate the impact of these shares on the country’s prevalence of obesity and being overweight; (2) compute for each country an indicator of dietary pattern based on the ratio between simple and complex carbohydrates, weighted by their estimated effects on the prevalence of obesity and being overweight; and (3) measure the elasticity of the prevalence of obesity and being overweight with respect to changes in both carbohydrate dietary pattern and income per capita. We find that unhealthy eating habits and the associated prevalence of excessive body fat accumulation tend to behave as a ‘normal good’ in low, medium- and high-HDI (Human Development Index) countries, but as an ‘inferior good’ in very high-HDI countries.

Groundwater in the Vietnamese Mekong Delta is facing the pollution and it needs to be protected. Searching literature reviews on economic valuation techniques, the contingent valuation method (CVM) has been popularly applied to estimate the economic value of water protection. This approach is based on a hypothetical scenario in which respondents are requested through questionnaires to reveal their maximum willingness to pay (WTP) for the water protection project. The study used the approach of CVM to analyze the households’ motivations and their WTP for the program of groundwater protection in the Mekong Delta. The study performed that the residents in the delta were willing to pay approximately 141,730 VND (US$6.74) per household a year. Groundwater could be an inferior good with the negative income effect found in the demanding for clean groundwater. Respondent’s gender and groundwater-related health risk consideration were factors sensitively affecting the probability of demanding for groundwater protection.

Consumers chose between options that paired either an objectively inferior good with high relative standing (Your laptop is rated 60/100 in quality; others' laptops are rated 50/100) or an objectively superior good with low relative standing (Your laptop is rated 80/100 in quality; others' laptops are rated 95/100). Decision makers who try to make the “best” decision, known as maximizers (Schwartz et al., 2002), pursued relative standing more than decision makers who are satisfied with outcomes that are “good enough” (known as satisficers). That is, maximizers were more likely than satisficers to choose objectively inferior products when they were associated with higher relative standing. Subsequent analyses investigating decisions across time showed that maximizers' interest in relative standing persisted even when the nature of the tradeoff was made overt, suggesting it is a conscious aspect of the maximizer identity. Overall, results suggest that the maximizer self concept is more complex than has been previously assumed—they are focused on relative outcomes in addition to absolute outcomes.

We consider the classical micro-economic foundation of discrete choice, additive random utility models, with conditional utilities depending on expenditure on the numeraire. We show that signs of own- and cross-price effects are identified on the basis of the primal problem only, and Giffen behaviour is ruled out. For the translog specification, we prove that the alternative with highest price behaves as normal good, and the alternative with lowest price behaves as inferior good. We establish conditions for equivalence between the primal and the dual problem. We provide a discrete choice version of the Slutsky equation which, similarly to divisible goods, decomposes the own-price effect into a substitution and an income effect.

Background Price-based mechanisms are an important tobacco cessation policy tool in New Zealand (NZ) and so measurement of smokers’ reaction to price changes is crucial in determining efficacy of this approach. Although approximately two-thirds of NZ tobacco demand is for manufactured cigarettes (MC) and one-third is for Roll-Your-Own (RYO) tobacco, previous price elasticity estimates have ignored differences between RYO tobacco and MC consumers. Methods We employ a seemingly unrelated regression econometric approach applied to quarterly data over the period 1991–2011 to estimate price elasticities of demand separately for MC and RYO tobacco. Results Estimate of price elasticity of demand for MC is −1.033, and −0.441 for RYO tobacco. RYO tobacco is an inferior good; a 1% increase in average weekly income is associated with a 0.8% reduction in demand. RYO tobacco is a substitute for MC; a 1% increase in the price of MC is associated with a 0.867% increase in demand for RYO tobacco. Conclusions There is significantly different price responsiveness across the two tobacco product types. MC smokers react far more strongly to price increases compared with RYO tobacco smokers. These findings suggest that pricing mechanisms may be more effective for reducing MC demand than for RYO tobacco. However, substitution between products means that this pricing effect is muted by the uptake of RYO tobacco use. Cessation policy specific to RYO use should be designed to target this growing group.

Much of the existing literature on the relationship between nuclear energy consumption and gross domestic product (GDP) deals only with the causal links between these two variables. However, very little attention has been paid to the structure and form of this relationship. This paper first uses panel cointegration techniques to illustrate the form of an inverted U-shaped curve that arises from pooled data, then, applies the iterative empirical Bayesian procedure in order to account for the heterogeneity in the coefficients of the long-term relationship. The empirical results from a multivariate framework involving carbon dioxide (CO2) emissions reveal that for only 3 of the 21 nuclear countries studied, a linear form of the relationship can be justified and that nuclear energy goes from being a normal good to being an inferior good for the majority of the sample countries. (C) 2013 Elsevier Ltd. All rights reserved.

1971) shows that the risky asset is a normal good (its demand is increasing with income or wealth) if the Arrow-Pratt measure of absolute risk aversion is decreasing. Arrow also proves that a sufficient condition for the income elasticity of demand for the risk free asset to be greater than one is that relative risk aversion is increasing. Aura, Diamond, and Geanakoplos ( 2002) point out that these two results together imply that both assets are normal goods. However if one relaxes either the assumption that the risk free asset is held long or that preferences exhibit increasing relative risk aversion, we show that the risk free asset can be an inferior good. Moreover, it can even be a Giffen good, where cor responding to an own price increase, the asset’s positive income effect swamps the negative substitution effect resulting in increased demand. What is particularly sur prising is that both inferior and Giffen good behavior can be exhibited for members of the widely popular HARA (hyperbolic absolute risk aversion) family of utility functions. 1 This is in contrast to much of the classic demand theory literature where very special forms of utility need to be constructed to produce Giffen behavior (see, for instance, Doi, Iwasa, and Shimomura 2009). We consider two examples of HARA utility functions of the form W(x) = −( x + a) −δ /δ, where δ > −1, x denotes consumption and absolute risk aversion is decreasing. For the case where a > 0, this utility satisfies the Arrow requirement of increasing relative risk aversion, but when the risk aversion parameter δ is sufficiently large, the risk free asset will always be an inferior good over some income range where it is held short. For a < 0, where relative risk aversion is decreasing, we show that the risk free asset will always be a Giffen good for some combination of prices and income. Moreover distinct regions in the price-income space are identified where the risk free asset exhibits normal good, inferior good, and Giffen behavior. In fact, the only member of the HARA class for which the risk free and risky assets are both always normal goods is the very special constant relative risk aversion (CRRA) form. 2 We also provide a non-HARA example for which relative

As smoking has detrimental impacts on the health of smokers and non-smokers, it is important that various restrictive policies are implemented to minimize the prevalence of smoking. Relevant policies have been outlined, such as warning labels on cigarette packages, bans on advertising of tobacco products and the banning of smoking in various places. An increase of the awareness of the public of the detrimental effects of smoking is important; however, the effectiveness of such programmes will depend largely on smokers’ motivation to quit smoking. The more educated people are, the more health conscious they become. As people become more aware of the causes of behavioural diseases, smoking becomes an inferior good so that consequently mortality from smoking declines.

The U.S. fluid milk market has been experiencing two trends in the recent decade: the fast growth of private label milk and organic milk. Using the latest Nielsen Consumer Panel Dataset, we estimate a censored demand system to study the demand relations among types of milk differentiated by brand types and organic status. We find that sociodemographic factors still play important roles in household choice of milk types, and fluid milk, as a whole, is an inferior good. Moreover, as income increases, households are more likely to shift from buying conventional milk to organic milk and from private label conventional milk to branded conventional milk, as indicated by the asymmetric cross price elasticities. Corresponding implications for milk producers and marketers are discussed.

Drawing on a database containing information on spending power of individuals and match attendance in the national football championship for 2006-2010, this research has the purpose to find out whether Romanian football is a normal or an inferior good. For making the correlation between the two economic proxys, the bivariate analysis function in SPSS was used. The results show a significant and negative correlation between the variables, indicating that football is an inferior good. In the discussion section, the paper presents some of the reasons that made local soccer reach inferiority and shows suggestions that could be implemented in order to not allow further coverage and attendance losses to occur due to the inferior status. The paper contributes to a better understanding of the local football industry, the latter one lacking economic and business oriented management which could make it more performant.

Recent empirical research for different regions of the United States indicates that residential electricity may be an “inferior” good whose consumption is negatively correlated with income. That is a provocative result that runs counter to what many earlier econometric studies indicate. Given that, it makes sense to examine how electricity consumption behaves in different regional service areas. Even if residential electricity is an inferior good whose usage declines as income rises, there is no guarantee that this will be the case across all service areas. This study examines residential electricity consumption for Seattle, Washington, the largest metropolitan economy in the northwestern region of the United States. Results from a dynamic error correction modeling approach indicate that residential electricity consumption reacts in statistically significant manners to changes in real price, real income, and cold weather. In the short-run, residential electricity is a normal good in this metropolitan economy. In the long-run, residential electricity appears to be an inferior good in Seattle. All else equal, whenever real per capita income growth exceeds 1.2%, per capita residential electricity usage declines in Seattle.

This paper considers the demand for insurance in a model with uncertain indemnity. Uncertain indemnity tends to increase the demand for insurance for precautionary reasons, but it also tends to decrease the demand due to the risk created by indemnity uncertainty. When the coefficient of relative prudence is not too large, uncertain indemnity reduces the demand for insurance and partial coverage is optimal even at actuarially fair premiums. In addition, insurance may be an inferior good or a normal good, depending on the behavior of absolute risk aversion and the magnitude of the coefficient of relative risk aversion.

This paper analyzes the demand for fuels in Iran automotive sector, using the Almost Ideal Demand System to estimate price and income elasticities for all the available fuels in the automotive sector: gasoline, automotive gas oil and Liquefied Petroleum Gas (LPG). These estimates can be very useful in predicting the overall impacts of price policies designed to reduce fuel consumption and to address concerns of carbon emissions or energy security. Empirical results indicate all own-price elasticities are negative and significant at 5% level. The own-price elasticity for gas oil, gasoline and LPG were estimated by about -0.22, -1.01 and -3.58, respectively. The findings also show that gasoline and gas oil are normal goods and LPG being an inferior good.

This study analyzes the differences between the determinants of economic demand for television audiences and gate attendance. Due to data availability problems, there are few studies focused on television demand for North American sports leagues, and most of those studies do not compare the differences between television and live game audiences. The primary determinants of demand that are compared are income, team quality, and both direct and indirect substitutes. Using data from the National Basketball Association (NBA), we find that fans who attend games live are inherently different from fans who watch games on television. Although insignificant to gate attendance, income is an inferior good to television audiences. Fans who watch the games on television are 4.5 times more sensitive to winning. The demand for television audiences is decreased more by direct substitutes compared to gate demand. However, demand for gate attendance is decreased more by indirect substitutes compared to television demand.