Sir Robert Giffen and the Great Potato Famine: A Discussion of the Role of a Legend in Neoclassical Economics

It is widely believed that British economist Sir Robert Giffen observed Irish peasants consuming increasing quantities of potatoes as potato prices rose during the mid-nineteenth century famine. The conventional explanation for this purported behavior assumes that potatoes were strongly inferior goods and constituted a large portion of the typical Irish consumer's budget; consequently, the demand curve for them was upward-sloping. The historical evidence, however, appears to contradict this view. Indeed, the very nature of a famine implies that this behavior could not have been characteristic of the populace as a whole. There is no way to buy more potatoes when there are fewer potatoes. Thus, the Giffen legend concerning the great potato famine appears at best to be a misinterpretation of some observed but misunderstood phenomenon, and at worst a kind of hoax. The purpose of this paper is to examine the perpetuation of the prevailing theory despite its historical inaccuracy. We briefly review the controversy surrounding the Giffen legend and examine the paradigmatic value of the existing legend. Some concluding remarks are given at the end of the paper.