Are there any goods that are income inferior?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are definitely goods that are income inferior.  These are goods for which demand decreases as incomes rise.  With most goods, increases in income cause increases in demand.  This makes sense because people who have more money will be more likely to buy most things.  But there are some goods for which the process is reversed.

Some goods are simply less attractive to people who have more money.  They are things that many people consume only if they must.  One example of such a good would be used cars.  There are, of course, people who will buy used cars in any circumstance (perhaps for a teen to use).  But the general trend would be that people who have more money will buy new cars because they are more prestigious and, perhaps, of better quality.  Another example would be generic goods at stores.  In general, people with more money are more likely to want to buy “brand name” goods than generic goods.  As incomes rise, the demand for generic goods will fall.  One final example is really a service, but is still referred to as an inferior good.  This is public transportation.  In most (but not all) cases, people will use public transportation less if they have the money to take other options.

All of these, then, are examples of income-inferior goods.

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