Description
totalPriceDerivative = substitutionEffect+incomeEffect; giffenSign is true only when the total is positive.
An economic model specifies how quantities, prices or marginal values relate under stated assumptions. A derivative, reaction function or first-order-condition term is a local model object rather than an empirical finding or complete equilibrium solution.
totalPriceDerivative = substitutionEffect+incomeEffect; giffenSign is true only when the total is positive.
When to use this tool
Use Giffen Income Substitution Sign Gap when checking one explicit theoretical economic-model relationship.
How to use the tool and how it works
- Enter substitutionEffect, incomeEffect. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read totalPriceDerivative, giffenSign. Inspect giffenSign before interpreting the associated values.
Require substitutionEffect <= 0. totalPriceDerivative = substitutionEffect+incomeEffect; giffenSign is true only when the total is positive.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| substitutionEffect | Substitution Effect | Required. Finite number; maximum 0. |
| incomeEffect | Income Effect | Required. Finite number. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| totalPriceDerivative | Total Price Derivative | Required. Finite number. |
| giffenSign | Giffen Sign | Required. Boolean. |
{
"input": {
"substitutionEffect": -2,
"incomeEffect": 3
},
"output": {
"totalPriceDerivative": 1,
"giffenSign": true
}
}Limitations and assumptions
- Both inputs are compatible own-price derivative contributions. The sign condition is model arithmetic, not empirical identification of a Giffen good or causal estimation.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Use a complete model, defensible parameter estimates and suitable identification before drawing empirical or policy conclusions.
References
Similar or alternative tools
- Cobb Douglas Marginal Rate Substitution Term
mrs = alpha*y/((1-alpha)*x), the positive MUx/MUy magnitude for x^alpha*y^(1-alpha).
- Ces Substitution Elasticity Parameter Crosswalk
elasticity = 1/(1-rho), using the CES convention with rho as the power on inputs inside the aggregator.