I think there is a related fallacy which is to see a current level of demand / characteristics of a market as representing a "natural" and fixed state, rather than a function of constraints such as the cost of resources. E.g. criticism of the viability of SpaceX's Falcon Heavy rocket hinged on weak demand for putting large payloads into space. But this ignores the possibility that payload sizes are constrained because it's too expensive to launch them, and that having a cheaper option will create the market for it. I'd argue that the core of successful entrepreneurship is being able to see through this fallacy, and being able to identify gaps in the market that are the result of hidden, unmet demand, either in terms of price or functionality.
For some markets I find it reasonable to assume that high price differentiation is ment to increase the barrier to entry, to keep the market exclusive.
YouTube increased the efficiency of their site which ended up increasing average page load time - more people across the globe could now use the site when before it was too slow to bother with.
Not really, because users with a high page load time can skew the average by a very large amount.
Hypothetically, let's say that previously they had 10 users who all took 2.5 seconds to load the page, so their average page load time is 2.5 seconds. After the change, those users all drop to a 1 second page load time. They also attracted one new user who now only has to wait 20 seconds instead of 50 seconds. Their average page load time is now 2.7 seconds but their usage only increased by 10%.
Jevons paradox applies when we talk about automation. What is the resource that is used more efficiently when things are automated? Human labor. Thus automation increases the demand for human labor.
But then I remembered David Graebers notion of bullshit jobs.
The best explanation I came across so far was that in todays economy, the supply side is not a problem. So actual work has to be put in to create demand: That's the advertisement industry.
Sadly, I don't have a link at hand to the article explaining this idea.
Yup - the same applies to any resource or service. As costs go down so o barriers to entry.
The article makes a good point in pointing out that people often overlook this when talking about efficiencies leading to lower consumption of resources.
I don't love wordpress articles, but I'll see if I can find some better source material. Their argument is that it supports the Rebound Effect – US is using more lighting (lumens) but less energy because of efficiency gains in light bulbs!
Right but according to the link "In 1865, the English economist William Stanley Jevons observed that technological improvements that increased the efficiency of coal-use led to the increased consumption of coal in a wide range of industries. He argued that, contrary to common intuition, technological progress could not be relied upon to reduce fuel consumption" but in the case of our world it actually has produced lower consumption.
Substitute the phrase economic demand or as Adam Smith termed it, effectual demand, for just "demand".
(I'm not saying this because I agree with economics, necessarily, I'm just trying to clarify the distinction.)
The problem is that economics has a domain-specific set of definitions and terms, many of which have similar but meaningfully different definitions in common usage. Or in other scientific disciplines (or if you prefer: in scientific disciplines). So an economist and a biologist might see a different meaning for "demand" when talking about food needs of an individual, where the biologist is looking at metabolic requirements for calories, macro-, and micro-nutrients, and an economist is interested in market prices and ability to pay.
In the case of the Jevons Paradox, the market price of a service that's been made more efficient effectively falls. This exposes more effectual demand, that is, consumers with a capability to pay that market rate, for the good. Hence the total quantity demanded increases.
This actually isn't a shift in demand, as an economist would see it, but a shift in the supply curve (or supply function). The demand function itself, what economists call "demand", remains unchanged, but the quantity demanded increases. Again, as a result in the supply shift.
Confusing at first, yes. But this part of economics, usually, actually makes sense.
Interestingly, your definition of “everyday demand” is close to the concept of demand in economics, and your definition of “economic demand” is exactly the concept in economics of “quantity demanded” (the quantity coordinate of the point on the demand curve with a particular price coordinate.)
Very interesting. That means my first comment makes sense.
Because it would mean economic/everyday demand is very inelastic with respect to price. If I want world peace, a mansion in the hamptons, my own tropical island, that want will remain the same pretty much the same from day to day.
Highways in particular are an interesting and perverse case in that traffic will increase well beyond the level of service provided. Building capacity increases congestion.
There's another interesting dynamic, though, in that increased transportation efficiency has effectively expanded the scope of travel services demanded.
When most personal transport was via foot, and goods moved by cart, or ship, urban scales were small (1-3 miles was a large city), goods moved short distances, and production was largely localised.[1] As cargo and personal transport capabilities increased, with ships, canals,[2] railroads, automobiles and aircraft, land usage patterns increased.
People started taking holidays and travelling on vacations, or weekends. Suburbs emerged, first streetcar, then railroad, then automobile. Inter-city transport emerged via rail and bus, later international travel via aircraft. The gas turbine has given us not a bunch of jet propulsion engineers, but holidays in Mauritius and Phuket, whilst our household goods arrive via container from Shanghai and electronics from Shenzhen.
Travel also vastly expanded epidemiological vectors for disease transmission.
I'm wondering what completes the analogy:
automobiles::suburbs
ai::???
__________________________________
Notes:
1. Which is to say, we had a decentralised, local-first, non-monopoly world at one time. It was also non-technological. Seeking decentralised technological solutions may prove to be like fucking for virginity: an appealing, rewarding, and enjoyable, but ultimately fruitless pursuit.
2. The impact of the Erie Canal on transport and commerce patterns within the U.S. was profound. New York City owes its prominence not only to the natural harbour in which it lies, but to the geography and geology of the Mohawk Valley. In a related statistic, a table of carrying capacity of a horse ranges from 1/8 ton in saddlebags to 80 tons on a canal, for a net ratio of 1:640. To a rough approximation this continues to hold true for energy efficiencies in transport, though you might care to start with the capacity of a wagon on a macadam road, about 8 tons.
That's actually not quite true. You can certainly build a new road that will lighten up traffic.
Traffic engineering is a rather serious and complicated science, the demand on a road can fluctuate based on hundred of factors such as the time of year, weather condition, urban development, population size and density, time of day, weekday, the kind of radio everyone is listening to, tailgating fractions, etc etc etc.
Building a road requires some serious thought into how to build it so that not everyone jumps on the new road while also not preventing anyone from using it. For all conditions.
