Sir Robert Giffen (1837–1910) was a British statistician, economist, and writer on finance. He was born in the Scottish town of Strathaven and was educated at the local village school. He showed an early aptitude for journalism, he and his brother contributing anonymous poems and articles to the local newspaper. At the age of 13 he entered the office of a Glasgow solicitor in a very minor position but made use of his seven years’ stay in that city by attending lectures at the university. Journalism, however, attracted Giffen more than the law, and in 1860 he became reporter and subeditor of the Stirling Journal. Like many another Scot before him, he was lured south of the border, and he became connected with the Globe, then more or less the official organ of Lord Palmerston’s administration. After a short time on the Fortnightly Review, in 1868 he became subeditor of the Economist, then under the editorship of Walter Bagehot.
The time that Giffen spent in the city of London was to serve him well in his future career. His contact with Bagehot was especially profitable, for he acquired from Bagehot both his style and his methodology. His later connection with the city office of the Daily News provided an invaluable acquaintance with the London stock exchange and the ways of the London financial community.
In 1871, when the Report on Local Taxation was published, George Goschen, president of the Poor Law Board and main author of the report, acknowledged Giffen’s assistance. The reputation so earned led to Giffen’s appointment as chief of the statistical section and controller of corn returns at the Board of Trade. An attempt in 1876 to reorganize this body and transfer some of its functions to the Foreign Office proved unsatisfactory; the old Statistical Department was revived and reorganized with Giffen at its head as assistant secretary. In 1892 he became controller-general of the Commercial, Labour, and Statistical departments, a position he retained until his retirement in 1897, having received the k.c.b. in 1895 in recognition of his service.
When Giffen accepted his position in the civil service he obtained permission to publish his views on matters of economic interest. Indeed, he was very active in the affairs of the Royal Statistical Society and the Royal Economic Society; he was influential in the founding of the latter body in 1890 and president of the former from 1882 to 1884. A frequent, almost prolific, contributor to the journals of both bodies, he was also editor of the Journal of the Royal Statistical Society from 1876 to 1891 and provided the “city notes” in the Economic Journal until he died.
Giffen’s reputation rests mainly on his work in “official statistics,” a field which had been pioneered by G. R. Porter, who was the first to organize the crude, incomplete mass of statistics relating to revenue and commerce. Richard Valpy made further improvements, instituting the system of statistical abstracts. Giffen was largely responsible for the first attempts to collect figures relating to the wages of manual laborers and for setting up the Bureau of Labour Statistics. Although Giffen appeared to have little knowledge of the mathematical theory of statistics, he had a remarkable intuitive grasp of the significance of facts and figures, a gift that allowed him to clear the way through the most complicated problems by the use of bold estimates. He was always inclined to caution, but his imaginative approach caused him to tackle such problems as the measurement of national income, which had formerly been considered too difficult a task by many an able statistician. In addition, his journalistic flair did much to popularize the use of statistics, and his wide acquaintance and knowledge of the world of finance and business led government departments and official bodies to seek his advice. In fact, some of his most important work is to be found in official reports.
While at the height of his career, Giffen’s opinion was respected in the fields both of applied and theoretical economics; today he is chiefly remembered for his “Paradox,” mentioned in Book 3 of Marshall’s Principles ( 1961, p. 132). This exception to the general law of demand was held to operate in a community heavily dependent upon one commodity for its staple diet. If the price of this commodity falls, the real income of the community is increased so that it can afford to buy superior foodstuffs and thereby cut down its consumption of the “Giffen good.” The opposite will occur in the case of a price rise, producing the unusual effect of quantity demanded increasing as prices rise and falling as prices fall.
Giffen was among the earliest to analyze the workings of the quantity theory of money, and the role played by the rate of interest, within an economy possessing a banking system. His ideas seem to have had a great deal of influence on Alfred Marshall, over and beyond the “Paradox.” Giffen was very much concerned with the way in which the volume of “bank money” affects the level of currency. In Stock Exchange Securities (1877) and two essays, “The Effects on Trade of the Supply of Coinage” (in [1879-1885] 1886, pp. 89-104) and “Gold Supply: The Rate of Discount and Prices” (ibid., pp. 37-88), he very clearly indicated the relationship that exists between a banker’s cash reserves and the level of deposits, and the part played by the discount rate in bringing about an equilibrium between the supply of gold and the level of prices.
His “dispensation” from refraining to participate in current controversy allowed him to become a leading protagonist in many of the debates of the latter part of the nineteenth century. A staunch laissez-faire economist, he was an avid opponent of the protectionist and socialist schools, both at home and abroad; but he was willing to concede that protection could have political advantages, especially when it concerned colonial produce, and was willing to tolerate it in a mild degree if it was the only alternative to socialism. As might be expected, he was also opposed to much of Gladstone’s financial policy and was a foremost antagonist of the bimetallist school.
K. J. Penney
(1869–1879) 1890 Essays in Finance. First series. 5th ed. London: Bell.
(1869–1902) 1904 Economic Inquiries and Studies. 2 vols. London: Bell.
1877 Stock Exchange Securities: An Essay on the General Causes of Fluctuations in Their Price. London: Bell.
(1879–1885) 1886 Essays in Finance. Second series. New York: Putnam.
1889 The Growth of Capital. London: Bell.
1913 Statistics …Written About the Years 1898–1900. Edited with an introduction by Henry Higgs, and with the assistance of G. Udny Yule. London: Macmillan. → Published posthumously.
Anonymous 1910 Sir Robert Giffen. Economic Journal 20:318–321.
Bateman, A. E. 1910 Sir Robert Giffen. Journal of the Royal Statistical Society Series A 73:529–533.
Brown, Ernest H. P.; and Browne, M. H. 1963 Carroll D. Wright and the Development of British Labour Statistics. Economica New Series 30:277–286.
Eshag, Eprime 1963 From Marshall to Keynes: An Essay on the Monetary Theory of the Cambridge School. Oxford: Blackwell.
Marshall, Alfred (1890) 1961 Principles of Econom ics. 9th ed. New York and London: Macmillan. → See especially Book 3, page 132.
Stigler, George 1947 Notes on the History of the Giffen Paradox. Journal of Political Economy 55:152–156.