Whilst it seems that a dinner with the legendary investor Warren Buffett still retains its Veblen good features (when peoples’ preference for buying a good increases as a direct function of its price, instead of decreasing according to the standard laws of demand); it seems that it also has an inelastic YED, with the credit crunch having a limited impact.
Most of us would would consider a $1.7 million dinner to be a high luxury good, and thus when the economy plummeted, with the concomitant falls in income, demand for the dinner would also plummet. But it seems that despite the credit crunch, the auction generated the second-highest bid ever. One possible explanation for this is that in the world of $1.7 million dinners, for the people who actually have the effective demand for such a good, income levels are so high, the good is perceived to be a normal good and the YED for this product is actually very inelastic - which would explain why the auction was still so successful this year.
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