You have probably heard of the widely believed myth that Napoleon was very short. Evidence proved after his death, however, that he had a completely normal height. Historians, interestingly, have mentioned that this narrative could have spread so thoroughly due to British painters drawing him short almost in a sarcastic way. Myths such as this, however irrelevant, do not alter the truth. Some myths, however, are so powerful that they make truth appear like a myth. This is the case of “Giffen goods”—goods that are demanded more when their prices rise. Many believe that there can be some special, so-called Giffen goods that can exclusively have an upward-sloping demand curve. Historically, mathematically, and economically, this is impossible.

Turning to its historical inaccuracy, a Giffen good does not have a real-world example. Giffen goods first appeared in Alfred Marshall’s Principles in 1895, in which he mentions very briefly that, in the latter half of the nineteenth century, the consumption of wheat goods such as bread in Britain was not reduced while their prices were bid up. He suggests that because bread is an overwhelmingly inferior good and due to the hoarding behavior of the poor masses, they would buy more of it even as its price increased. Thus, an upward-sloping demand curve.

He goes on to attribute the discovery of such a phenomenon to Giffen and regards this type of good as the only exception to the Law of Demand. This is not, however, the source of the Giffen good’s eminence. It is only in 1964 that in his book Economics, Paul Samuelson again mentions the Giffen good after almost half a century, with reference to a completely different occurrence—the Great Famine in Ireland:

When the 1845 Irish famine greatly raised the price of potatoes, families who consumed a lot of potatoes merely because they were too poor to consume much meat might have ended up consuming more rather than less of the high-P[rice] potatoes.

When the 1845 Irish famine greatly raised the price of potatoes, families who consumed a lot of potatoes merely because they were too poor to consume much meat might have ended up consuming more rather than less of the high-P[rice] potatoes.

He then goes on to........

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