Jevon's Paradox

If you’re new here, every week I share a handful of high-signal bits. Let’s get to it:

• Makes-You-Think Tweet: purpose of reading
• Mind-Expanding Concept: Jevons paradox
• Cool Quote or Question: the feeling of being wrong/right
• High-Signal Content: Sequoia’s PMF framework

Makes-You-Think Tweet

Mind-Expanding Concept

Jevon’s Paradox

When increasing the efficiency of an activity does not decrease the inputs consumption but increases it.

• If oil gets cheaper through improvements in extraction technology, we don't extract less oil. At a lower cost, new use cases come online, pushing the demand (and production) upwards.

• Ubers have improved transportation efficiency. But people might get Ubers for rides that they would walk or bike instead, increasing the total number of miles travelled.

Although this happens at an indutry level, I suspect it is anchored on human behavior.

• I'm a farmer. I adopt new technologies that increase my corn yield. I produce more and make more money. I could use a smaller area next year and make the same amount. That's not what I do. I farm the whole area and make more money. With the extra cash I buy an adjacent field to increase my corn area next year.

• I start buying groceries online because it’s efficient and cheap enough. Then, I start placing more frequent orders (which increases emissions per unit) and I might buy superfluous things because I mean…they right there on the app and look yummy.

People tend to maximize private short-term utility and understimate systemic and long-term impacts.

The implication: efficiency improvements alone cannot guarantee reduced resource consumption unless paired with deliberate curbing mechanisms. These can be caps, taxes, or regulations in the industry level or commitment devices or predetermined rules at the individual levels.

Cool Quote or Question

High-Signal Content

“We think the best way is to start by focusing on how the customer relates to the problem your product solves.”

See you next week,

Filipe