Jevons Paradox is that when we increase the efficiency of the use of a resource we might not actually see a reduction in the use of that resource. The greater efficiency might make the use of the resource cheaper per whatever it is we\’re getting from it and thus actually increase the use of the resource.
This isn\’t actually just greenie nuttery, it is possible for it to happen. However, as with almost every question in economics the true answer is \”it depends\”. Depends upon what?
Konrad highlights the critical point – whether demand for the good in question is elastic or inelastic – and suggests that the demand for electric power is relatively inelastic and therefore the demand for lighting is inelastic, hence reductions in the cost of lighting will not lead to more that proportionate increases in the quantity of lighting consumed.
Yup…so we don\’t actually know whether LED lightbulbs will reduce, increase or keep the same the amount of electricity we use in lighting.
We can make guesses, as above, based upon what we know about the elasticity of demand. Pretty good guesses, informed guesses, but guesses all the same.
For there\’s still something we don\’t know. Yes, we can calculate our elasticity from past prices and levels of usage, we can calculate present ones too. Well, pretty well, roughly, at least.
However, elasticities change dependent upon what range we\’re in.
Think of water for a moment. That first litre or two a day has one elasticity, we\’ll pay damn near anything to get it. When we\’ve got a few tens of gallons a day to a few hundreds of gallons a day it\’s entirely different. To the point that we usually don\’t bother metering it for we\’re aware that price has very little to do with how much of it we\’ll use. When we\’ve got a few thousand gallons a day coming through the house we\’ll actually pay someone to take it away: some nice young man with a pump to get it out of the basement.
So where are we with lighting? We can say that we\’re not at the hiring the young man with the pump stage yet (given the inability of such to get light out of our house this is useful) but we do know that that stage will be reached at some point.
The existence of people who wear sunglasses other than as a fashion statement proves that.
So, will LED bulbs reduce, keep the same or increase the amount of electricity used to create light? The answer is \”we dunno\”.
All we can do is try it and find out.