What are giffen goods?

Giffen goods are things you might buy more of when they get more expensive, which sounds a little strange, but it happens because you don’t have much money to begin with.

Imagine you’re playing with your favorite toys, and your piggy bank is almost empty. Your favorite toy is a giffen good for you. Let’s say it costs 10 candies to buy one. You only have 20 candies in your piggy bank. If the price of the toy goes up, now it costs 15 candies, you might feel like you can’t afford anything else, so you decide to just buy more of that toy instead.

That’s how giffen goods work: when something gets more expensive, and you don’t have much money, you end up buying even more of it because there’s nothing else you can really afford. It's like choosing the one toy you love most, even if it costs more, because everything else seems too far out of reach.

This happens mostly with things that are very cheap and important to your daily life, like bread or rice for someone who doesn’t have much money. When the price goes up, they might end up buying more of it instead of other foods.