Posts Tagged Jevons Paradox

Outdoor Advertising and LEDs: Jevons’ Paradox or Not?

I’ve blogged before about when Jevons’ Paradox applies, and when it does not. When energy consumers are price sensitive, they may respond to increasing efficiency by using more energy services. When they are not price-sensitive, they don’t.

But here is a new twist: increasing efficiency may come bundled with additional features. Those features may lead consumers to use more energy, even if the increasing efficiency alone would not.

In the case of outdoor billboards, the advent of inexpensive LED lighting may not be so much due to increased efficiency over traditional lighting technology, but the result of additional utility. LED bilboards can show animation, and also can show time-sensitive advertisements. These extra features are leading to an increased use of electricity in billboards, even as the technology is becoming more energy efficient… at least in terms of lumens per watt?

Perhaps I’m splitting hairs here, but I think the increased use of energy in outdoor signage using LEDs is due more to the additional services and interactivity that LEDs provide compared to traditional halide lighting (see this article in the Economist). Put simply, when something becomes more useful, people use more of it, not, as Jevon’s paradox would imply, that people use more outdoor signage lighting as it becomes cheaper.

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When it Makes Sense to Worry About Jevons Paradox, and When it Doesn’t

Why High MPG Cars May be a Problem, But Efficient Lighting Isn’t

Tom Konrad, Ph.D.

Jevons Paradox: is the proposition that technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource.

-Wikipedia

Recently The Economist reported on research that concluded “making lighting more efficient could increase energy use, not decrease it.” Micheal Giberson at Knowledge Problem thought this was worth commenting on as an example of Jevons Paradox. I’m here to tell you that before we get worried about more efficient lighting, we should keep in mind when Jevons Paradox applies and when it does not.

Jevons’ Paradox is a consequence of the downward slope of the demand curve: when the price of something falls, we tend to demand more of it. The slope of the demand curve is also known as the elasticity of demand. A gently sloped demand curve (where consumption increases rapidly with decreasing price) is said to be "elastic," while a steeply sloping demand curve (where consumption increases only slowly with decreasing price) is said to be inelastic.

I recently wrote about some research showing that the elasticity of the demand for driving has increased in recent years. That means that the effect of Jevons Paradox is becoming more significant when it comes to driving: increases in automobile efficiency that decrease the cost of driving will have the effect of increasing driving more than they would have in the past, meaning that we should not count on increases in CAFE standards (which increase the efficiency of automobiles) to do much to reduce gasoline usage. Instead, we should focus on structural changes that reduce driving by increasing its marginal cost or decrease the marginal cost of alternative modes, such as mass transit.

Micheal Giberson’s note prompted me to look at the paper on which the Economist article was based. I found that the researchers assumed that the demand elasticity for light had not changed over the last 160 years, and would not change in the future. I find this assumption highly questionable, given that the structure of the lighting market has changed greatly as technology changed from candlelight to gas light to electric light.

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. In other words, contrary to the assumptions in the paper, demand for light has most likely become much more inelastic in recent years, and so we should not expect that increases in lighting efficiency (and the associated decreases in lighting cost) will have much effect on total light consumption.

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