Inferiorgut

Inferiorgut (also known as inferior good) is a term in economics describing a good for which demand decreases as household income rises, holding prices and other factors constant. The corresponding income elasticity of demand is negative, meaning that as people become wealthier, they buy less of these goods and substitute toward higher‑quality or more desirable alternatives. The concept is used to distinguish these goods from normal goods, for which demand increases with income.

Common examples cited in textbooks include budget or store-brand products, inexpensive meals, and other low-cost basic goods. In some markets, second-hand items and certain public services can function as inferior goods for particular groups or in particular circumstances. It is important to note that whether a good is considered inferior can vary by income level, culture, and over time; a good may be inferior for a low-income group but normal for higher-income groups.

Inferior goods are contrasted with Giffen goods, a rare subset of goods whose quantity demanded rises when price rises due to a dominant income effect. They are also distinct from Veblen goods, where demand increases with price due to perceived prestige. Classification as inferior is a descriptive, not normative, label tied to observed responses to income changes rather than to quality or value judgments.

Empirically, economists estimate inferior goods by observing negative income elasticities of demand. The degree of negativity can vary by good and population, and some goods may exhibit different classifications across different segments. Recognizing inferior goods helps explain how changes in income or social policy influence consumer spending patterns.