What are inferior goods?

In economics, it is known as inferior goods to those goods whose consumption is reduced due to the increase in the income of the consumer. In other words, they are the goods that are consumed less as more money is available to spend. This is not because they are necessarily defective or low-quality goods, but rather because they have higher-quality substitute goods on the market.

In general, inferior goods are of a simple type and are adequate to serve their purpose, but are comparatively inferior to others. goods and services of the same item that offer greater quality, greater variety or greater satisfaction, and that therefore are preferred when the consumer's income allows it. For example: margarine is an inferior food product, which tends to be displaced as soon as the consumer has a higher income, in favor of butter or lard.

In fact, there are no goods that are inferior to all consumers, since many of them are preferred despite higher quality options available. For example, public transport is still used by the majority of people, despite the fact that there is a more comfortable and expensive way to travel, the taxi.

It is important not to confuse inferior goods with the so-called "Giffen goods", which are a type of inferior goods that present a particular behavior, defying the law of demand: when the price of Giffen goods increases, their demand also increases proportionally.

• See also: normal and inferior goods

Difference Between Inferior Goods and Normal Goods

The fundamental difference between inferior goods and normal goods has to do with their behavior in the face of the increase in consumer income. On the one hand, inferior goods tend to be replaced by higher quality goods as soon as the consumer's economic possibilities increase, that is, his demand tends to collapse. In contrast, normal goods tend to increase in demand when consumer income increases.

For example: a consumer buys a monthly package of bread and jam for breakfast. Your budget allows you to aim for an inexpensive jam and half a dozen breads. Over time, the consumer receives a raise and decides that he can buy a better jam and instead of half a dozen loaves, he buys a full dozen. In this case, the low-cost jam acted as an inferior good, and was promptly replaced, while bread acted as a normal good, and its demand increased as money increased available.

It is important to note that normal goods can easily become inferior goods and vice versa.

Examples of Inferior Goods

Although the inferiority of a good depends on the replacement options available, the following are cases of typically inferior goods:

1. Fast and street food, substitutable for restaurant meals or of higher nutritional value.
2. Price-regulated staples (usually rice, pasta, potatoes, blended oils, etc.).
3. Second-hand clothing and other reused or recycled goods.
4. Public services subsidized or quota.
5. Artifacts and utensils that have exceeded their useful life.

Follow with:

• luxury goods
• higher goods
• free and cheap goods
• Durable and non-durable goods
• Essential or necessity goods

References

• "Inferior Good" in Wikipedia.
• “okay average” in Wikipedia.
• "Inferior Goods" in Wolters Klüwer.
• "Inferior Goods" in The economy (Mexico).
• “Normal and Inferior Goods” (video) on Khan Academy.