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nbernard 6 hours ago

> Jevons paradox happens when the cost of a resource goes down, but the total spend on that resource goes up.

I would argue that is not Jevons paradox but standard supply and demand (and this "reverse Jevons paradox" too). Jevons paradox occurs when a more efficient use of a resource leads to an increase in its use (instead of a decrease as a first order analysis would suggest).

dguest 4 hours ago | parent | next [-]

Supply and demand says when something is cheaper (or produced more efficiently), people will use more of it. But the critical part is that it doesn't say people will spend more on it.

Jevon's paradox is a special case of supply and demand, where people actually end up spending more money because something is cheaper.

It's interesting because consumption then grows in unpredictable ways: it can drive innovation even in cases where markets are constrained by monopolies, for example, where in non-Jevons cases producers would have no incentive to lower prices.

jagged-chisel 3 hours ago | parent | next [-]

So like buying the larger jar of jam that costs more than the smaller jar because the cost per ounce is less for the larger jar.

ben_w an hour ago | parent | next [-]

More like: (1) oil getting cheaper makes (2) cars possible which means (3) the average person can now go further to commute which means (4) they buy a car and get a higher paid job which mans (5) their oil consumption goes from "cooking and an oil lamp" to "transport to a job that pays better than the best you could get before automobiles displaced horses".

What would the food example be? Vanilla ice cream going from a rarity only the rich could afford, to a standard desert for all when the synthetic form was invented?

benrutter 3 hours ago | parent | prev | next [-]

Not OP but yes if you consume more jam (not if you consume the same over a period of time, because you're then just paying less for jam over a wider time scale).

The example I've heard given is accounting and spreadsheets. It made accountancy cheaper, but people then started asking more questions and analysis became a thing.

Rather than just taking the reduced spend as profit, companies wound up increasing their accountancy spend overall.

dguest 2 hours ago | parent [-]

Well consuming more jam per unit time would still be supply and demand, you have to spend more on jam overall because you can buy a cheaper jar.

rcxdude 3 hours ago | parent | prev [-]

Not exactly, unless you still wind up eating the larger jars at the same rate as the smaller ones.

rcxdude 3 hours ago | parent | prev [-]

You can rephrase it as the demand curve times the price (i.e. total spend on something vs the price) sometimes has a slope of less than -1.

martinhath 5 hours ago | parent | prev | next [-]

> Jevons paradox occurs when a more efficient use of a resource leads to an increase in its use

I think these are the same, because efficiency is value over cost. In the original formulation of the paradox, a more efficient steam engine lead to a rise in coal consumption. You can look at this as a "money buys coal, coal drives locomotion" system, where the latter part was improved. Modulo practical issues with coal (transport, storage, etc), dropping the price of coal would (probably?) lead to the same effect, since the end result is that locomotion per money is increased. For an outside observer, it doesn't matter if you get more coal per money or more locomotion per coal.

> standard supply and demand

Standard supply and demand doesn't say anything about increase of spend. If food prices drop, I'm not going to buy more food. I might buy better food for the same budget, but there's no reason why my total food spend should increase.

layla5alive an hour ago | parent [-]

Hoarding out of fear of the price going up later due to tariffs or other economic instability/inflation. The Trump paradox?

Not for perishables, but for non-perishables.

friendzis 6 hours ago | parent | prev | next [-]

> I would argue that is not Jevons paradox but standard supply and demand (and this "reverse Jevons paradox" too).

Kinda yes. How do you derive total spend from supply-demand curves? Multiply price and quantity at an intersection point. Likewise, you can predict total spend by multiplying p and q on the demand curve.

The difference in total spend is difference between these areas. For the total spend to increase with a drop in price, the the demand must rise faster.

Jevon's paradox implies that the price equilibrium is at the highly elastic portion of the demand curve.

> Jevons paradox occurs when a more efficient use of a resource leads to an increase in its use

While that's mostly true in practical reality in established economies, that does not strictly have to be the case. On the consumer side, especially in manufacturing, there's very little difference between unit price of a good falling and input unit per output units dropping as both lead to decreased COGS. In both cases, market realities might unlock alternative approaches (the classic being robot replacing Robert), leading to increased demand.

fxwin 6 hours ago | parent | prev | next [-]

I think it's still valid to see this as an example of the Jevons paradox: Your resource is money, and reduced per-unit cost means you are using your money (resource) more efficiently. If the total spend now goes up instead of stagnating or decreasing, you've got Jevons

jpfromlondon 5 hours ago | parent | prev | next [-]

you are absolutely correct, the author is putting the cart before the horse.

6 hours ago | parent | prev [-]
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