History of the Jevons Paradox - Essay Example

The paper "History of the Jevons Paradox" is a perfect example of an essay on macro and microeconomics.In economics, the Jevons paradox, which is also known as the Jevons effect, is the statement that technological progress that increases efficiency with which a resource is used tends to increase the rate of consumption of the same resource. The Jevons paradox was first brought up by William Stanley Jevons in 1865. Through his book, The Coal Question, Jevons argued that advancements in fuel efficiency tend to increase, rather than decrease, fuel use.

Jevons stated that “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." Jevons noted that England's consumption of coal increased after James Watt invented his coal-fired steam engine, which improved the efficiency of Thomas Newcomen's previous design in a great deal. Watt's improvements made coal a more cost-effective source of energy and power, leading to the increased use of the steam engine in many industries.

This increased the consumption of coal, even as the amount of coal required for any particular use fell. At that time, people in Britain worried that coal reserves were rapidly diminishing but experts advised that increasing the efficiency of coal would reduce its consumption. Jevons himself argued that this notion was incorrect, as further increases in efficiency of coal would tend to increase its use. Therefore, increasing the efficiency of coal would tend to increase, instead of reducing, the rate at which its deposits were being depleted ( Tadit 176).

This issue has recently been reexamined by most modern economists studying the effects of consumption rebound resulting from improved energy efficiency. Apart from reducing the quantity needed for a given use or application, improved efficiency reduces the relative cost of using a particular resource. This, in turn, increases demand for the resource and possibly counteracting any savings from improved efficiency. Additionally, improved efficiency accelerates economic growth which further increases the demand for resources.

The Jevons paradox comes to life when the effect from increased demand predominates, resulting in an increase in overall use of the resource. The Jevons paradox has been used to prove that energy conservation is pointless, as increased fuel efficiency will actually increase its use. Even so, increased efficiency can lead to better material living standards. Therefore, fuel use declines if increased efficiency is followed by a green tax that keeps the cost of using the same or sometimes higher.

Now that the Jevons paradox applies only to technological advancements that increase fuel efficiency, many policies that promote conservation standards and increase costs do not show the Jevons paradox. One of notable result of the Jevons paradox was the oil embargo by OPEC in 1973 against states that were supporting Israel's Yom Kippur War against Egypt and Syria. Suddenly big gas-guzzling vehicles were avoided in favor of more energy-efficient cars. The Jevons paradox can also be used in food production.

Since fewer people are required to work on farms with modern farming equipment and techniques, food production increased (David 78). The population will increase due to the high abundance of food reserves thereby increasing the demand for food and leading to more innovation. When supply of food increases, prices go down and the demand increases due to lower prices. Many investors view the increase in demand as a good opportunity for making a profit and to invest in food production which also leads to an increase in supply.

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