Tom Konrad explains, “When it Makes Sense to Worry About Jevons Paradox, and When it Doesn’t.”
Konrad highlights the critical point – whether demand for the good in question is elastic or inelastic – and suggests that the demand for electric power is relatively inelastic and therefore the demand for lighting is inelastic, hence reductions in the cost of lighting will not lead to more that proportionate increases in the quantity of lighting consumed. Konrad:
When candles were the primary light source, acquiring light required a lot more effort than just flipping on a light switch, and it was possible to see the light you purchased being used up as a candle burned down. Today, we would have to go outside our house (at night) and watch the meter spin to see visual evidence of the cost of light, and even then it would be difficult if not impossible to isolate the effect of the cost of light from the cost of watching TV or running our refrigerator.
Because it’s much harder today for a consumer to determine the true cost of the light he is using, I expect that consumers will be much less sensitive to changes in the price of light than they were in the past.
Two background factors may work against Konrad’s view. If, for example, the real price of electric power increases over the next twenty years, the higher price would increase the salience of the price and reward consumer’s efforts to economize in its use. Further, whether or not the real price of power increases, it is becoming easier for consumers to identify and track power consumption on a socket-by-socket or circuit-by-circuit basis.
Of course don’t jump to the conclusion that just because more efficient lamps may lead to an increase in the consumption of energy, that more efficient lamps are a bad thing. Improvements in technical efficiency increase the ranges of choices to consumers such that consumers are not worse off. It just may be the case that promoting improved efficiency in lighting is not an effective energy conservation strategy.
In the case of automobile efficiency, Konrad notes that the elasticity of demand for driving has increased in recent years, which leads the Jevons Paradox to be a concern if one expects fuel economy regulations to do much to reduce oil consumption.
NOTES: Konrad’s post is in part a reaction to my post last week on the potential for efficient lighting to lead to increased energy consumption; my post relied on an article in The Economist, which in turn drew upon this research article in The Journal of Physics D: Applied Physics.