Idea of the Day: Jevons Paradox – why isn’t it getting cheaper?

Graham’s summary: As things get cheaper, we increase our use such that we end up paying more than we did before.

Jevons Paradox is named after William Stanley Jevons (1835-1882) who was an English economist and logician.

The life of ideas is something that fascinates me. How long does it take an idea to become mainstream? Why do some ideas live and others don’t? That kind of a thing. This particular idea is over 150 years old and is still being hotly debated.

It’s also worth observing that Jevons wrote about the paradox at the age of 30; he was dead by 46.

The paradox is summarised by William Stanley Jevons as follows:

“It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth.”

Several real-world examples of this:

As our vehicles get more efficient, we travel more, and the level of oil consumption continues to rise.

As clothes cleaning technologies have taken the labour out of cleaning, we clean far more than we used to, the result being that we now spend more time cleaning clothes than we used to. Interestingly, there’s a secondary effect here, cleaning clothes more regularly has required us to have more clothes, but that’s a whole other conversation.

In the world of IT the cost of storage continues to go down, per gigabyte, but the rate at which we are storing things is accelerating even faster. Storage is just one technology commodity, the same is true for compute and networking capacity.

I’ve been involved with several conversations with customers where they expected the deployment of a new system to reduce their costs, only for the new system to increase use and drive higher costs overall.

Jevons paradox is hotly debated in energy circles where the concern is that as renewable energy becomes more efficient the result is an overall increase in our use of energy rather than a displacement of the non-renewable alternatives.

Over recent weeks there has been a vogue for organisations to announce huge reductions in their workforce resulting from the expected use of Artificial Intelligence (AI). Here’s one example: BT to axe up to 55,000 jobs by 2030 as it pushes into AI | BT | The Guardian. Apart from the observation that 2030 is a lifetime away in AI terms, does it also overlook Jevons and his paradox? Yes, lots of jobs will be directly impacted by AI, but how many of those will just morph into different jobs?

What if, having made a unit of work cheaper – which is what AI is doing – we use more of it and the result is that we need more people than we used to? That’s the challenge of Jevons Paradox.

Are the organisations declaring staff reductions just short-sighted?

Header Image: This is the river Dart in Devon. The Dart is famous amongst wild swimmers, and this is one of the most popular places to swim. We weren’t swimming, but only because we’d just been for a swim in the sea, and we were doing a bit of exploring during a short trip to the south of England.

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