SlideShare a Scribd company logo
1 of 25
The Jevons’ Paradox 
By Raja Abdarrahman
William Stanley Jevons 
• Born on 1st September 1835 in Liverpool, England 
• Departed on 13th August 1882 in Sussex, England 
• Studied in University College London and Owens College (University of 
Manchester) 
• Influenced by Jeremy Bentham (British philosopher, jurist, and social 
reformer. He is regarded as the founder of modern utilitarianism)
William Stanley Jevons 
• English economist and logician, wrote the book “A General 
Mathematical Theory of Political Economy” 
• Called the initiator of mathematical method in economics 
• Applauded for his theories on the consumption and 
production efficiencies 
• Famous for the Marginal Utility Theory
William Stanley Jevons 
• He published General Mathematical Theory of Political 
Economy in 1862, outlining the marginal utility theory of 
value 
• Admirable contribution to marginal revolution in the 19th 
century 
• Got public recognition on a large scale for his theory “The 
Jevons’ Paradox” / “The Jevons’ Effect”
Origin of The Jevons’ Paradox 
• First described by William Stanley Jevons in 1865 in his book, “The 
Coal Question” 
• Coal was one of the most required power sources of the time
Origin of The Jevons’ Paradox 
• Technologists wanted to make machines efficient in the usage of 
coal to reserve it for the future 
• James Watt had recently invented the upgrade of coal fired steam 
engine
Origin of The Jevons’ Paradox 
• This along with other innovations made coal a more cost-effective and 
efficient power source 
• As a result, the consumption of coal increased 
• Increased coal consumption was thought of as a major concern for the 
future to come, by Jevons 
• So he observed the changes in coal consumption after the technological 
advancements and came out with a theory which is now known as “The 
Jevons’ Paradox”
Jevons’ Paradox 
• Economists believed that technological progress to make efficient power 
sources would decrease their consumption 
• For example, before invention of steam engine 3 tons of coal was being 
used to run process A, but now only 1 ton was required 
• It was thought of as a success by both the economists and technologists 
• Economists were happy because energy was being provided at a lower 
cost, and technologists were happy because they had provided it
Jevons’ Paradox 
• The primary objective was to reserve coal for the future to come 
• As now 2 tons of coal was being saved, people thought that they 
had achieved what they wanted to achieve 
• As the aftermath of this, firms and industries started to buy more 
and more coal fired steam engines and shifting towards way of 
productions that used coal
Jevons’ Paradox 
• And now, it was being observed that the rate of England’s coal 
depletion was still increasing 
• People including many economists believed that more of 
technological progress must be made in order to achieve a 
sufficient and efficient way of production 
• But, William Stanley Jevons thought otherwise
Jevons’ Paradox 
He suggested that: 
• When technological progress is made to achieve cost effective 
sources of power, the prices of those sources fall 
• As the consequence, the quantity demanded of those sources rises 
• And what you primarily wanted to achieve could not be achieved 
i.e., reduced coal usage
Jevons’ Paradox 
• Jevons argued that improvements in fuel efficiency tend to 
increase, rather than decrease, fuel use 
"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.“ – The Coal Question 
• Hence, improving technology would tend to increase the rate at 
which England's coal deposits were being depleted
The Rebound Effect 
• One way to understand the Jevons paradox 
• A rise in the efficiency with which a resource (e.g., fuel) is used causes a 
decrease in the price of that resource when measured in terms of what 
it can achieve (e.g., work) 
• A fall in the price of a good/service will increase their quantity 
demanded 
• Thus with a lower price for work, more work will be "purchased" 
(indirectly, by buying more fuel)
The Rebound Effect 
• The resulting increase in the demand for fuel is known as the 
rebound effect 
• This increase in demand may or may not be large enough to offset 
the original drop in demand from the increased efficiency 
• The Jevons paradox occurs when the rebound effect is greater 
than 100%
The Rebound Effect – Perfectly Competitive 
Market – Price Elastic Demand for Work 
• Assumption: Fuel is the sole input used, and the only determinant 
of the cost of work 
• If the price of fuel remains constant but the efficiency of its 
conversion into work is doubled, the effective price of work is 
halved and twice as much work can be purchased for the same 
amount of money 
• If the amount of work purchased more than doubles (i.e., demand 
for work is price elastic), then the quantity of fuel used would 
increase, not decrease
The Rebound Effect – Perfectly Competitive 
Market – Price Elastic Demand for Work
What makes this paradox 
ineffective?
The Rebound Effect – Perfectly Competitive 
Market – Price Inelastic Demand for Work 
• People will only buy the amount of work that they actually 
require, the demand will not increase a lot 
• The amount of work purchased would less than double 
• Hence, the quantity of fuel used would decrease 
• In this case, the original objective will be achieved
The Rebound Effect – Perfectly Competitive 
Market – Price Inelastic Demand for Work
A Total Analysis 
• William Jevons did not take into account all the other inputs that 
may decrease the price of work e.g.,(labor, land, machinery) 
• He only examined the effect of changes in the price of fuel 
• If he’d have done a full analysis, he’d have found out that these 
factors tend to decrease the effect of fuel efficiency on the price 
of work, and hence reduce the rebound effect
Harry Saunders’ Analysis, 1992 
• Increased energy efficiency tends to increase energy consumption 
by two means 
• First, increased energy efficiency makes the use of energy 
relatively cheaper, thus encouraging increased use (the direct 
rebound effect) 
• Second, increased energy efficiency leads to increased economic 
growth, which pulls up energy use for the whole economy
Harry Saunders’ Analysis, 1992 
• At the microeconomic level (looking at an individual market), 
even with the rebound effect, improvements in energy efficiency 
usually result in reduced energy consumption 
• At the macroeconomic level, more efficient (and hence 
comparatively cheaper) energy leads to faster economic growth, 
which in turn increases energy use throughout the economy until 
maximum potential output is achieved
Harry Saunders’ Analysis, 1992 
Saunders concludes that, taking into account both microeconomic 
and macroeconomic effects, technological progress that improves 
energy efficiency will tend to increase overall energy use, until the 
point where maximum potential output is achieved.
Implementations of Jevons’ Paradox 
• People thought of it as a very useful advise in earlier times, and 
tried to generally reduce the usage of coal 
• But, that did not really help in achieving economic growth 
• In today’s world, technological advancement is considered as one 
of the most important objectives of any economy for overall 
growth
THANK YOU! 
QUESTIONS?

More Related Content

What's hot

Production Possibility Curve
Production Possibility CurveProduction Possibility Curve
Production Possibility CurveNeeti Naag
 
3. Ricardian theory of growth
3. Ricardian theory of growth3. Ricardian theory of growth
3. Ricardian theory of growthPrabha Panth
 
8 business cycles
8 business cycles8 business cycles
8 business cyclesdomsr
 
Keynes's psychological law of consumption
Keynes's psychological law of consumptionKeynes's psychological law of consumption
Keynes's psychological law of consumptionAbhishekSharma2611
 
Inflation
Inflation Inflation
Inflation M Umar
 
The investment function
The investment functionThe investment function
The investment functionAmit Chaudhary
 
Harrod domar model of growth
Harrod domar model of growthHarrod domar model of growth
Harrod domar model of growthManojSharma968
 
Baumol's model of demand for money
Baumol's model of demand for moneyBaumol's model of demand for money
Baumol's model of demand for moneyPrabha Panth
 
History of Economic Thought
History of Economic ThoughtHistory of Economic Thought
History of Economic ThoughtJohn Cousins
 
Revealed preference theory
Revealed preference theoryRevealed preference theory
Revealed preference theorynasab144
 
Theory of income and employment chap 1
Theory of income and employment chap 1Theory of income and employment chap 1
Theory of income and employment chap 1Nayan Vaghela
 
Concept and application of cd and ces production function in resource managem...
Concept and application of cd and ces production function in resource managem...Concept and application of cd and ces production function in resource managem...
Concept and application of cd and ces production function in resource managem...Nar B Chhetri
 

What's hot (20)

Production Possibility Curve
Production Possibility CurveProduction Possibility Curve
Production Possibility Curve
 
3. Ricardian theory of growth
3. Ricardian theory of growth3. Ricardian theory of growth
3. Ricardian theory of growth
 
8 business cycles
8 business cycles8 business cycles
8 business cycles
 
IS-LM Analysis
IS-LM AnalysisIS-LM Analysis
IS-LM Analysis
 
Keynes's psychological law of consumption
Keynes's psychological law of consumptionKeynes's psychological law of consumption
Keynes's psychological law of consumption
 
Inflation
Inflation Inflation
Inflation
 
General equilibrium ppt
General equilibrium pptGeneral equilibrium ppt
General equilibrium ppt
 
The investment function
The investment functionThe investment function
The investment function
 
Business cycles
Business cyclesBusiness cycles
Business cycles
 
Harrod domar model of growth
Harrod domar model of growthHarrod domar model of growth
Harrod domar model of growth
 
Classical economic thought
Classical economic thoughtClassical economic thought
Classical economic thought
 
Baumol's model of demand for money
Baumol's model of demand for moneyBaumol's model of demand for money
Baumol's model of demand for money
 
History of Economic Thought
History of Economic ThoughtHistory of Economic Thought
History of Economic Thought
 
Philip's Curve
Philip's CurvePhilip's Curve
Philip's Curve
 
Inflation and Deflation
Inflation and DeflationInflation and Deflation
Inflation and Deflation
 
David ricardo
David ricardoDavid ricardo
David ricardo
 
Revealed preference theory
Revealed preference theoryRevealed preference theory
Revealed preference theory
 
Theory of income and employment chap 1
Theory of income and employment chap 1Theory of income and employment chap 1
Theory of income and employment chap 1
 
Lewis model
Lewis model Lewis model
Lewis model
 
Concept and application of cd and ces production function in resource managem...
Concept and application of cd and ces production function in resource managem...Concept and application of cd and ces production function in resource managem...
Concept and application of cd and ces production function in resource managem...
 

Viewers also liked

Growing role of Groundwater in Indian irrigation in transition
Growing role of Groundwater in Indian irrigation in transitionGrowing role of Groundwater in Indian irrigation in transition
Growing role of Groundwater in Indian irrigation in transitionIndia Water Portal
 
Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...
Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...
Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...Bradley Franklin
 
Malthus' theory of population growth
Malthus' theory of population growthMalthus' theory of population growth
Malthus' theory of population growthyahui_tan
 
Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14
Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14
Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14Ambo University (Ethiopia)
 
Artificial ground water recharge ppt
Artificial ground water recharge pptArtificial ground water recharge ppt
Artificial ground water recharge pptLaukush Kumar
 
Artificial ground water recharge
Artificial ground water rechargeArtificial ground water recharge
Artificial ground water rechargeAnkit Saini
 

Viewers also liked (10)

Growing role of Groundwater in Indian irrigation in transition
Growing role of Groundwater in Indian irrigation in transitionGrowing role of Groundwater in Indian irrigation in transition
Growing role of Groundwater in Indian irrigation in transition
 
Menger.....
Menger.....Menger.....
Menger.....
 
Taming the Anarchy – Towards sustainable use of groundwater
Taming the Anarchy – Towards sustainable use of groundwater Taming the Anarchy – Towards sustainable use of groundwater
Taming the Anarchy – Towards sustainable use of groundwater
 
Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...
Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...
Solar Irrigation Pumps in India: Can Electricity Buy-Back Curb Groundwater Ov...
 
Marginalism
MarginalismMarginalism
Marginalism
 
Irrigation methods
Irrigation methodsIrrigation methods
Irrigation methods
 
Malthus' theory of population growth
Malthus' theory of population growthMalthus' theory of population growth
Malthus' theory of population growth
 
Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14
Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14
Chapter 5 methods of irrigation Dr. Thomas Abraham_19-3-14
 
Artificial ground water recharge ppt
Artificial ground water recharge pptArtificial ground water recharge ppt
Artificial ground water recharge ppt
 
Artificial ground water recharge
Artificial ground water rechargeArtificial ground water recharge
Artificial ground water recharge
 

Similar to The Jevons Paradox

Similar to The Jevons Paradox (20)

Energy economics
Energy economicsEnergy economics
Energy economics
 
Energy economics
Energy economicsEnergy economics
Energy economics
 
Introduction to Power Plants.pdf
Introduction to Power Plants.pdfIntroduction to Power Plants.pdf
Introduction to Power Plants.pdf
 
Energy is indispensable and essential for human lives • Wide variation in ene...
Energy is indispensable and essential for human lives • Wide variation in ene...Energy is indispensable and essential for human lives • Wide variation in ene...
Energy is indispensable and essential for human lives • Wide variation in ene...
 
Clean energy technology
Clean energy technologyClean energy technology
Clean energy technology
 
Energy as a master resource
Energy as a master resourceEnergy as a master resource
Energy as a master resource
 
Environmental economics in health
Environmental economics in healthEnvironmental economics in health
Environmental economics in health
 
Chemistry M4 Rates
Chemistry M4 RatesChemistry M4 Rates
Chemistry M4 Rates
 
Energy
EnergyEnergy
Energy
 
Advances in power generation
Advances in power generationAdvances in power generation
Advances in power generation
 
sources of energy
sources of energysources of energy
sources of energy
 
Chapter 3 Natural resources.pptx
Chapter 3 Natural resources.pptxChapter 3 Natural resources.pptx
Chapter 3 Natural resources.pptx
 
Energypresentation
EnergypresentationEnergypresentation
Energypresentation
 
Natural resources
Natural resources  Natural resources
Natural resources
 
Energypresentation
EnergypresentationEnergypresentation
Energypresentation
 
ECEg - 4242 - Chapter - two.pdf
ECEg - 4242 - Chapter - two.pdfECEg - 4242 - Chapter - two.pdf
ECEg - 4242 - Chapter - two.pdf
 
Energy
EnergyEnergy
Energy
 
Energy
EnergyEnergy
Energy
 
Renewable energy resources
Renewable energy resourcesRenewable energy resources
Renewable energy resources
 
Energy resources
Energy resourcesEnergy resources
Energy resources
 

More from Raja Abdarrahman

Liquidity Risk Measurement
Liquidity Risk MeasurementLiquidity Risk Measurement
Liquidity Risk MeasurementRaja Abdarrahman
 
Progressive taxation and the subjective well being of nations
Progressive taxation and the subjective well being of nationsProgressive taxation and the subjective well being of nations
Progressive taxation and the subjective well being of nationsRaja Abdarrahman
 
Effects of TV Violence on Children
Effects of TV Violence on ChildrenEffects of TV Violence on Children
Effects of TV Violence on ChildrenRaja Abdarrahman
 
How To Give A Knockout Presentation
How To Give A Knockout PresentationHow To Give A Knockout Presentation
How To Give A Knockout PresentationRaja Abdarrahman
 
Effects of Tv Violence On Children
Effects of Tv Violence On ChildrenEffects of Tv Violence On Children
Effects of Tv Violence On ChildrenRaja Abdarrahman
 

More from Raja Abdarrahman (7)

Liquidity Risk Measurement
Liquidity Risk MeasurementLiquidity Risk Measurement
Liquidity Risk Measurement
 
Progressive taxation and the subjective well being of nations
Progressive taxation and the subjective well being of nationsProgressive taxation and the subjective well being of nations
Progressive taxation and the subjective well being of nations
 
Royal Bank of Canada
Royal Bank of CanadaRoyal Bank of Canada
Royal Bank of Canada
 
The Theory of Dreaming
The Theory of DreamingThe Theory of Dreaming
The Theory of Dreaming
 
Effects of TV Violence on Children
Effects of TV Violence on ChildrenEffects of TV Violence on Children
Effects of TV Violence on Children
 
How To Give A Knockout Presentation
How To Give A Knockout PresentationHow To Give A Knockout Presentation
How To Give A Knockout Presentation
 
Effects of Tv Violence On Children
Effects of Tv Violence On ChildrenEffects of Tv Violence On Children
Effects of Tv Violence On Children
 

Recently uploaded

What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024prajwalgopocket
 
Liquidity Decisions in Financial management
Liquidity Decisions in Financial managementLiquidity Decisions in Financial management
Liquidity Decisions in Financial managementshrutisingh143670
 
Global Economic Outlook, 2024 - Scholaride Consulting
Global Economic Outlook, 2024 - Scholaride ConsultingGlobal Economic Outlook, 2024 - Scholaride Consulting
Global Economic Outlook, 2024 - Scholaride Consultingswastiknandyofficial
 
Introduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptxIntroduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptxDrRkurinjiMalarkurin
 
Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...
Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...
Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...Amil baba
 
Stock Market Brief Deck FOR 4/17 video.pdf
Stock Market Brief Deck FOR 4/17 video.pdfStock Market Brief Deck FOR 4/17 video.pdf
Stock Market Brief Deck FOR 4/17 video.pdfMichael Silva
 
The AES Investment Code - the go-to counsel for the most well-informed, wise...
The AES Investment Code -  the go-to counsel for the most well-informed, wise...The AES Investment Code -  the go-to counsel for the most well-informed, wise...
The AES Investment Code - the go-to counsel for the most well-informed, wise...AES International
 
The Inspirational Story of Julio Herrera Velutini - Global Finance Leader
The Inspirational Story of Julio Herrera Velutini - Global Finance LeaderThe Inspirational Story of Julio Herrera Velutini - Global Finance Leader
The Inspirational Story of Julio Herrera Velutini - Global Finance LeaderArianna Varetto
 
Hello this ppt is about seminar final project
Hello this ppt is about seminar final projectHello this ppt is about seminar final project
Hello this ppt is about seminar final projectninnasirsi
 
Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024Money Forward
 
The top 4 AI cryptocurrencies to know in 2024 .pdf
The top 4 AI cryptocurrencies to know in 2024 .pdfThe top 4 AI cryptocurrencies to know in 2024 .pdf
The top 4 AI cryptocurrencies to know in 2024 .pdfJhon Thompson
 
Market Morning Updates for 16th April 2024
Market Morning Updates for 16th April 2024Market Morning Updates for 16th April 2024
Market Morning Updates for 16th April 2024Devarsh Vakil
 
Banking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptxBanking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptxANTHONYAKINYOSOYE1
 
10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdf10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdfglobusfinanza
 
NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...
NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...
NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...Amil baba
 
2024 Q1 Crypto Industry Report | CoinGecko
2024 Q1 Crypto Industry Report | CoinGecko2024 Q1 Crypto Industry Report | CoinGecko
2024 Q1 Crypto Industry Report | CoinGeckoCoinGecko
 
Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...
Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...
Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...Amil baba
 
『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书
『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书
『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书rnrncn29
 
NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...
NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...
NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...Amil baba
 
Gender and caste discrimination in india
Gender and caste discrimination in indiaGender and caste discrimination in india
Gender and caste discrimination in indiavandanasingh01072003
 

Recently uploaded (20)

What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024
 
Liquidity Decisions in Financial management
Liquidity Decisions in Financial managementLiquidity Decisions in Financial management
Liquidity Decisions in Financial management
 
Global Economic Outlook, 2024 - Scholaride Consulting
Global Economic Outlook, 2024 - Scholaride ConsultingGlobal Economic Outlook, 2024 - Scholaride Consulting
Global Economic Outlook, 2024 - Scholaride Consulting
 
Introduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptxIntroduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptx
 
Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...
Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...
Uae-NO1 Pakistani Amil Baba Real Amil baba In Pakistan Najoomi Baba in Pakist...
 
Stock Market Brief Deck FOR 4/17 video.pdf
Stock Market Brief Deck FOR 4/17 video.pdfStock Market Brief Deck FOR 4/17 video.pdf
Stock Market Brief Deck FOR 4/17 video.pdf
 
The AES Investment Code - the go-to counsel for the most well-informed, wise...
The AES Investment Code -  the go-to counsel for the most well-informed, wise...The AES Investment Code -  the go-to counsel for the most well-informed, wise...
The AES Investment Code - the go-to counsel for the most well-informed, wise...
 
The Inspirational Story of Julio Herrera Velutini - Global Finance Leader
The Inspirational Story of Julio Herrera Velutini - Global Finance LeaderThe Inspirational Story of Julio Herrera Velutini - Global Finance Leader
The Inspirational Story of Julio Herrera Velutini - Global Finance Leader
 
Hello this ppt is about seminar final project
Hello this ppt is about seminar final projectHello this ppt is about seminar final project
Hello this ppt is about seminar final project
 
Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024
 
The top 4 AI cryptocurrencies to know in 2024 .pdf
The top 4 AI cryptocurrencies to know in 2024 .pdfThe top 4 AI cryptocurrencies to know in 2024 .pdf
The top 4 AI cryptocurrencies to know in 2024 .pdf
 
Market Morning Updates for 16th April 2024
Market Morning Updates for 16th April 2024Market Morning Updates for 16th April 2024
Market Morning Updates for 16th April 2024
 
Banking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptxBanking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptx
 
10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdf10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdf
 
NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...
NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...
NO1 Certified Black Magic Specialist Expert In Bahawalpur, Sargodha, Sialkot,...
 
2024 Q1 Crypto Industry Report | CoinGecko
2024 Q1 Crypto Industry Report | CoinGecko2024 Q1 Crypto Industry Report | CoinGecko
2024 Q1 Crypto Industry Report | CoinGecko
 
Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...
Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...
Uae-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Ra...
 
『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书
『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书
『澳洲文凭』买科廷大学毕业证书成绩单办理澳洲Curtin文凭学位证书
 
NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...
NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...
NO1 Certified kala jadu karne wale ka contact number kala jadu karne wale bab...
 
Gender and caste discrimination in india
Gender and caste discrimination in indiaGender and caste discrimination in india
Gender and caste discrimination in india
 

The Jevons Paradox

  • 1. The Jevons’ Paradox By Raja Abdarrahman
  • 2. William Stanley Jevons • Born on 1st September 1835 in Liverpool, England • Departed on 13th August 1882 in Sussex, England • Studied in University College London and Owens College (University of Manchester) • Influenced by Jeremy Bentham (British philosopher, jurist, and social reformer. He is regarded as the founder of modern utilitarianism)
  • 3. William Stanley Jevons • English economist and logician, wrote the book “A General Mathematical Theory of Political Economy” • Called the initiator of mathematical method in economics • Applauded for his theories on the consumption and production efficiencies • Famous for the Marginal Utility Theory
  • 4. William Stanley Jevons • He published General Mathematical Theory of Political Economy in 1862, outlining the marginal utility theory of value • Admirable contribution to marginal revolution in the 19th century • Got public recognition on a large scale for his theory “The Jevons’ Paradox” / “The Jevons’ Effect”
  • 5. Origin of The Jevons’ Paradox • First described by William Stanley Jevons in 1865 in his book, “The Coal Question” • Coal was one of the most required power sources of the time
  • 6. Origin of The Jevons’ Paradox • Technologists wanted to make machines efficient in the usage of coal to reserve it for the future • James Watt had recently invented the upgrade of coal fired steam engine
  • 7. Origin of The Jevons’ Paradox • This along with other innovations made coal a more cost-effective and efficient power source • As a result, the consumption of coal increased • Increased coal consumption was thought of as a major concern for the future to come, by Jevons • So he observed the changes in coal consumption after the technological advancements and came out with a theory which is now known as “The Jevons’ Paradox”
  • 8. Jevons’ Paradox • Economists believed that technological progress to make efficient power sources would decrease their consumption • For example, before invention of steam engine 3 tons of coal was being used to run process A, but now only 1 ton was required • It was thought of as a success by both the economists and technologists • Economists were happy because energy was being provided at a lower cost, and technologists were happy because they had provided it
  • 9. Jevons’ Paradox • The primary objective was to reserve coal for the future to come • As now 2 tons of coal was being saved, people thought that they had achieved what they wanted to achieve • As the aftermath of this, firms and industries started to buy more and more coal fired steam engines and shifting towards way of productions that used coal
  • 10. Jevons’ Paradox • And now, it was being observed that the rate of England’s coal depletion was still increasing • People including many economists believed that more of technological progress must be made in order to achieve a sufficient and efficient way of production • But, William Stanley Jevons thought otherwise
  • 11. Jevons’ Paradox He suggested that: • When technological progress is made to achieve cost effective sources of power, the prices of those sources fall • As the consequence, the quantity demanded of those sources rises • And what you primarily wanted to achieve could not be achieved i.e., reduced coal usage
  • 12. Jevons’ Paradox • Jevons argued that improvements in fuel efficiency tend to increase, rather than decrease, fuel use "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.“ – The Coal Question • Hence, improving technology would tend to increase the rate at which England's coal deposits were being depleted
  • 13. The Rebound Effect • One way to understand the Jevons paradox • A rise in the efficiency with which a resource (e.g., fuel) is used causes a decrease in the price of that resource when measured in terms of what it can achieve (e.g., work) • A fall in the price of a good/service will increase their quantity demanded • Thus with a lower price for work, more work will be "purchased" (indirectly, by buying more fuel)
  • 14. The Rebound Effect • The resulting increase in the demand for fuel is known as the rebound effect • This increase in demand may or may not be large enough to offset the original drop in demand from the increased efficiency • The Jevons paradox occurs when the rebound effect is greater than 100%
  • 15. The Rebound Effect – Perfectly Competitive Market – Price Elastic Demand for Work • Assumption: Fuel is the sole input used, and the only determinant of the cost of work • If the price of fuel remains constant but the efficiency of its conversion into work is doubled, the effective price of work is halved and twice as much work can be purchased for the same amount of money • If the amount of work purchased more than doubles (i.e., demand for work is price elastic), then the quantity of fuel used would increase, not decrease
  • 16. The Rebound Effect – Perfectly Competitive Market – Price Elastic Demand for Work
  • 17. What makes this paradox ineffective?
  • 18. The Rebound Effect – Perfectly Competitive Market – Price Inelastic Demand for Work • People will only buy the amount of work that they actually require, the demand will not increase a lot • The amount of work purchased would less than double • Hence, the quantity of fuel used would decrease • In this case, the original objective will be achieved
  • 19. The Rebound Effect – Perfectly Competitive Market – Price Inelastic Demand for Work
  • 20. A Total Analysis • William Jevons did not take into account all the other inputs that may decrease the price of work e.g.,(labor, land, machinery) • He only examined the effect of changes in the price of fuel • If he’d have done a full analysis, he’d have found out that these factors tend to decrease the effect of fuel efficiency on the price of work, and hence reduce the rebound effect
  • 21. Harry Saunders’ Analysis, 1992 • Increased energy efficiency tends to increase energy consumption by two means • First, increased energy efficiency makes the use of energy relatively cheaper, thus encouraging increased use (the direct rebound effect) • Second, increased energy efficiency leads to increased economic growth, which pulls up energy use for the whole economy
  • 22. Harry Saunders’ Analysis, 1992 • At the microeconomic level (looking at an individual market), even with the rebound effect, improvements in energy efficiency usually result in reduced energy consumption • At the macroeconomic level, more efficient (and hence comparatively cheaper) energy leads to faster economic growth, which in turn increases energy use throughout the economy until maximum potential output is achieved
  • 23. Harry Saunders’ Analysis, 1992 Saunders concludes that, taking into account both microeconomic and macroeconomic effects, technological progress that improves energy efficiency will tend to increase overall energy use, until the point where maximum potential output is achieved.
  • 24. Implementations of Jevons’ Paradox • People thought of it as a very useful advise in earlier times, and tried to generally reduce the usage of coal • But, that did not really help in achieving economic growth • In today’s world, technological advancement is considered as one of the most important objectives of any economy for overall growth