Actuarially unfair insurance and downward-sloping demand curves for Giffengoods

Barzel and Suen (Economic Journal, Vol. 102 (1992), No. 413, pp. 896-905) h ave shown that, if households can purchase actuarially fair insurance again st higher prices, then goods which would have upward-sloping demand curves in the absence of the price insurance will have downward-sloping demand cur ves when the insurance is available. This note builds on their analysis by showing that, if the utility function is additively separable, then goods w hich would be Giffen in the absence of the insurance still have downward-sl oping demand curves even when the price insurance exhibits certain types of actuarial unfairness.