Item — HN Reader

Jevon's Paradox [1]

An example from [1]:

```

Jevons observed that England's consumption of coal soared after James Watt introduced the Watt steam engine, which greatly improved the efficiency of the coal-fired steam engine from Thomas Newcomen's earlier design. Watt's innovations made coal a more cost-effective power source, leading to the increased use of the steam engine in a wide range of industries. This in turn increased total coal consumption, even as the amount of coal required for any particular application fell. Jevons argued that improvements in fuel efficiency tend to increase (rather than decrease) fuel use ...

```

[1] https://en.wikipedia.org/wiki/Jevons_paradox

2 comments

Jevon's paradox only occurs under very specific circumstances. I would bet on it not happening in the context Jeff Dean is referring to.

https://en.wikipedia.org/wiki/Jevons_paradox#Cause

> The size of the direct rebound effect is dependent on the price elasticity of demand for the good.[11] In a perfectly competitive market where fuel is the sole input used, if the price of fuel remains constant but efficiency is doubled, the effective price of travel would be halved (twice as much travel can be purchased). If in response, the amount of travel purchased more than doubles (i.e. demand is price elastic), then fuel consumption would increase, and the Jevons paradox would occur. If demand is price inelastic, the amount of travel purchased would less than double, and fuel consumption would decrease. However, goods and services generally use more than one type of input (e.g. fuel, labour, machinery), and other factors besides input cost may also affect price. These factors tend to reduce the rebound effect, making the Jevons paradox less likely to occur.

Here, I know your meaning is about market adoption of AI, but also on the topic of AI this made me wonder why it intuitively feels to me like Jevon's model would be inadequate, but do I only have this intuition because of my education? I think there's another way: critically test the statement:

>Jevons argued that improvements in fuel efficiency tend to increase (rather than decrease) fuel use

In other words, I can ask: does aggregate fuel usage depend on fuel efficiency? If I state the question this way and ask myself to answer it, it starts to become obviously an incomplete model to use.

This may seem so pedestrian but it is so confusing for me to think about in terms of conceptualizing what structure was needed to recognize a poor prediction model and considering a better one. This seems so different than what AI is today.

I don't quite follow your comment but that isn't about to stop me guessing what you are asking and providing the intuitive model for the paradox.

The bad intuition is if X units of a resource are being used to achieve an outcome then providing the option of getting the same outcome with (X - something) will result in less resource use.

However, that is ignoring the economic principles of supply and demand to only focus on current use and demand. Reframing it from the supply side: it used to make sense to supply X units to do so much. Now supplying X units can do even more than so much.

So the economics of the situation are unlikely to cause a reduction in supply, because if it made sense to supply X units of resource before, it really makes economic sense to supply it now. In fact, since the resource is now more useful (efficiency rose) it probably makes sense to supply even more of it.

If Jevons's Paradox actually appears paradoxical, the root cause is a misunderstanding of supply and demand. If efficiency is modelled by moving the supply/demand curves around on a supply/demand chart it is pretty obvious what is going on; efficiency gains are equivalent to moving the supply curve under that model.