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Reverse Jevons Paradox

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Re: Reverse Jevons Paradox

#41

Post by dguest »

benrutter wrote: post #32
jagged-chisel wrote: post #30

Earlier quoted context omitted.

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.

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 acco…

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.

Re: Reverse Jevons Paradox

#42

Post by alan-crowe »

jihadjihad wrote: post #29

I can’t tell if this is a troll post or not, but either way, the concept the author seems to be looking for is called the “Law of Demand” [0]. 0: https://en.wikipedia.org/wiki/Law_of_demand

Not a troll. As recently as the 1870s, when Jevons, Menger, and Walras pioneered the Marginal Revolution in economics, this was a deep new insight about elasticity.

Imagine yourself a shop keeper, hoping to boost the money coming in at the till. If you increase prices by 10%, you will get more? Right?

That depends on the elasticity of demand. If the elasticity is two, the drop in demand is twice the increase in price. 0.8 times 1.1 is 0.88. Takings fall from $100 to $88.

But if the elasticity is one half, the drop in demand is half the increase in price. 0.95 times 1.1 is 1.045. Takings rise from $100 to $104.5.

When the price goes up the shop always sells less goods, (Law of Demand) but that still leaves it unclear whether more or less money goes in the till. This is first year University economics today.

Back in 1865, it was obvious to every-one that the increased efficiency of steam engines would lead to a reduced demand for coal. Jevons pointed out that increased efficiency makes steam power cheaper. Goodbye water wheel, hello steam engine. More steam engines, greater consumption of steam power, any-one who wants to make a prediction needs to invent the concept of elasticity and try to measure it. Greater than one? Less than one? That is going to decide whether total demand rises or falls.

Re: Reverse Jevons Paradox

#43

Post by pdpi »

jihadjihad wrote: post #29

I can’t tell if this is a troll post or not, but either way, the concept the author seems to be looking for is called the “Law of Demand” [0]. 0: https://en.wikipedia.org/wiki/Law_of_demand

No, the concept the author is talking about is the Jevons paradox, just like the title says.

The law of demand frames demand as a function of price and utility — demand is monotonically non-decreasing with utility (the more useful it is, the more people want it), and monotonically non-increasing with price (the pricier it is, the less people want it), but e.g. Giffen goods and Veblen goods break the "monotonically non-increasing with price" assumption of the law of demand.

You can add efficiency to that equation — demand is a function of price, utility and efficiency, and it is also monotonically non-increasing efficiency (The less of it you need, the less people want it). If you could get twice as much saltiness from table salt, you'd cut down demand by 50%.

The Jevons paradox is about the cases where demand isn't non-increasing with efficiency, because utility is itself a function of efficiency. Increased efficiency directly lowers demand, but, because it increases utility, it also increases demand indirectly.

The paradox is usually framed as more efficiency -> more demand (because of the intermediate "more utility" step), but the author is framing it in the opposite direction, as less efficiency -> less demand (because of the intermediate "less utility"). I would argue it's just that the paradox works both ways, rather than calling it a "reverse", but that's me.

Re: Reverse Jevons Paradox

#44

Post by ben_w »

jagged-chisel wrote: post #30
dguest wrote: post #27

Earlier quoted context omitted.

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 i…

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.

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?

Re: Reverse Jevons Paradox

#45

Post by layla5alive »

martinhath wrote: post #17
nbernard wrote: post #9

> 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).

> 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 (…

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.

Re: Reverse Jevons Paradox

#46

Post by layla5alive »

markild wrote: post #28
pu_pe wrote: post #16

Jevons Paradox is called a paradox because it is non-intuitive. It is very intuitive to conclude that when costs go up, people will use less of that thing.

I think it's a paradox in the same way that the non-reverse is. The spending might go down more than it's proportion of price increase. An example not anchored in anything: If public transit costs x, I'll use it every day. If public transit suddenly costs 2x, I'm not gonna use it every other day, I'll rather find an alternative and use 0.

Should be more like 'caution' than 'reverse-paradox'

Re: Reverse Jevons Paradox

#47

Post by elil17 »

I think that this person does not know what the Jevons Paradox is. The Jevons Paradox is that increasing the efficiency with which a resource is used may increase the total amount of that resource that is used. Consuming more because costs went down isn't the Jevons paradox - it's spending more because costs went down.

So if you give all your coders a great test harness and they run more tests because it takes up less of their time, that's not the Jevons paradox. If you give your coders a great test harness and then they go from spending 10% of work hours on testing to spending 20% of work hours on testing because testing has such a good ROI now, that's the Jevons paradox.

Re: Reverse Jevons Paradox

#48

Post by sokoloff »

“If delta-x is negative, then delta-y can be positive.”

It seems like there’s a straightforward/obvious corollary that reverses the sign on both clauses. (Walk the curve in the opposing direction.)

Re: Reverse Jevons Paradox

#50

Post by abanana »

alan-crowe wrote: post #42
jihadjihad wrote: post #29

I can’t tell if this is a troll post or not, but either way, the concept the author seems to be looking for is called the “Law of Demand” [0]. 0: https://en.wikipedia.org/wiki/Law_of_demand

Not a troll. As recently as the 1870s, when Jevons, Menger, and Walras pioneered the Marginal Revolution in economics, this was a deep new insight about elasticity . Imagine yourself a shop keeper, hoping to boost the money coming in at the till. If you increase prices by 10%, you will get more? Right? That depends on the elasticity of demand. If the elasticity is two, the drop in demand is twice the increase in pric…

It was first-year GCSE (age 14-15) economics for me. But yes that's exactly it, the author appears to have discovered the price elasticity concept, as a refinement of the Law of Demand.
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