Thursday, November 24, 2011

Jevons Paradox

After a lecture on sustainability, in which the lecturer spoke about the much greater energy efficiency of buildings and vehicles in recent decades, a student asked why we continue to consume energy at an ever-greater rate even as we have become more efficient in doing so and if that meant that energy efficiency worked against the goal of reducing energy consumption.

The British economist William Stanley Jevons observed, in the mid-19th Century, that with the greater efficiency in the use of coal, the consumption of coal increased at a greater rate, leading to the paradox that efficiency can increase rather than decrease the use of a resource. We can easily see why Jevons paradox can occur. Greater efficiency in the use of a resource can reduce its price, which prompts more consumption, and it can also increase economic growth, which also fuels greater use as more people can afford to do so. Jevons argued that because of this paradox, we couldn’t rely only on improvements in efficiency to reduce consumption of a fuel source like coal.

This raises a fundamental ethical issue, as well as an environmental one. In an era in which designers have worked very hard to increase the efficiency of energy consuming entities like buildings and vehicles, with the goal of reducing the use of finite supplies of fossil fuel, Jevons paradox poses a particularly challenging problem. Jevons did not say that we should, as a result of his paradox, ignore efficiency. He simply said that we cannot depend upon it alone and that other non-technological changes need to happen as well if we want to reduce consumption.

Some have argued that public policies can counter the paradoxical effects of greater efficiency. We can add a tax on the resource, place quotas on its use, or regulate its availability to keep the price high, even as the efficiency of its use increases. Such tactics, though, have proven to be hard to sell politically, striking some as “social engineering” by tampering with the way in which the marketplace innovates to increase the efficiency and reduce the cost of things. That the marketplace is itself a kind of social engineering doesn’t get discussed often enough, but so be it. We seem driven, at least in modern, technological societies, to increase consumption of resources until they become scarce (or damaging) enough that we can no longer afford them or have them available in enough quantity.

Ethics, though, offers another way of looking at this paradox. One of the primary divisions between ancient and modern ethics has to do with being versus doing. The ancients focused on what it meant to be a good person or on the nature of a good society, while we moderns have tended to dwell, instead, on what it means to do the right thing regardless of or because of its consequences. Jevons paradox occurs when we only focus on “doing.” And Jevons seemed to acknowledge that when he said that making a process more efficient alone would not reduce consumption. Doing the right thing also depends upon our being a good person and our living in a good society.

The Stoic philosophers, for example, argued that our freedom and happiness comes not from how much we have, but rather from how much we can do without. This may sound at odds with our consumer-oriented culture, but it simply extends to human behavior the same ethic designers embrace when making things more efficient. The real paradox in Jevons observation has to do with the modern disconnect between what we do and who we are.

Saturday, November 12, 2011


A colleague who writes about ethics, Nan DeMars, tells the story of a vendor who, seeking to have his products used, left a large bottle of scotch for the person in the office in charge of vendor selection. That person, unsure of what to do with the bottle, went to see the head of the firm who said: one bottle is a gift, two is a bribe.

Some cultures have what social scientists call a gift economy, in which people give and receive gifts without expectation of return. Such economies differ from the market economies, where goods have prices set by supply and demand, and while such economies have plenty of people who give gifts – indeed, some industries rely heavily on people giving gifts around holidays – this remains a relatively small part of the total economic output.

The key difference in this situation has to do with the intentions behind the gift. In gift economies or as happens in the holiday exchanges among family and friends, the giving occurs without a quid pro quo. We give gifts in these situations as tokens of our affection and appreciation, not to influence someone’s decision or to personally benefit ourselves. When a gift is given with the latter in mind, as in the case of this vendor, the difference between a gift and a bribe becomes unclear.

The receiver of this bottle of scotch did the right thing in asking the opinion of his superior. Ethics requires what the psychologist Daniel Kahneman calls “slow thinking,” in which we should not trust our initial instincts or first responses and, instead, seek the counsel of others as we deliberate what to do. Delaying a decision and sharing the responsibility for it can help us arrive at better conclusions, tapping what the writer James Surowiecki has dubbed “the wisdom of crowds.” This is one of the gifts others can give to us.

It isn’t clear, though, that keeping the large bottle of scotch is wise. While the supervisor sees a clear line between a gift and a bribe – one bottle versus two – others might not see it that way. Any “gift” given with even the appearance of influencing a decision in favor of the giver can constitute a bribe in the minds of some, and appearances matter in such situations. Accepting something that looks to some like a bribe calls into question whatever decision gets made, especially if it goes – legitimately or not – to the vendor who gave it.

The person who got the bottle could share it with everyone else in the office, which may seem to dilute the impact of it, but that can also implicate everyone else in influence that the giver of the bottle may have intended. A much better course would be to get rid of it. The receiver of the bottle could give it back to the vendor, although that does seem uncharitable. Doing the right thing, ethically, should not lead us to rudeness or to wrecking a relationship.

Giving the bottle to charity or as a gift to someone else makes more sense. In gift economies, the continual passing of gifts often happens since the act of giving matters much more than the gift itself. And even in a market economy, the passing on of a gift not wanted, for whatever reason, also remains the choice of the person who received it initially. In situations where the gift casts doubts about oneself or colors the perceptions of others about you, it is best to give it away. It wasn’t a bottle of scotch; it was a hot potato.