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Comment by dguest | Hacker News Reader

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.

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

No, this isn't what Jevons says. Jevons isn't concerned about money being spent on something, just total consumption of it. Whether more money or less is spent on it depends on the price elasticity of demand. Inelastic demand will lead to less money spent despite more of the resource/service/whatever being consumed. Elastic demand will lead to more money spent.

That's fair, it actually has nothing to do with money.

It's just saying that if $IN is more efficiently converted to $OUT, more $IN will be consumed.

The original paradox was $IN = coal and $OUT = work, i.e. more efficient coal use increased coal use.

With prices you have $IN = cash and $OUT = product: more efficient conversion of your cash to products can increase cash use.

I was using this special case, but indeed the more general case doesn't have to involve cash at all.

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 accountancy spend overall.

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.

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

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?

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.

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