There’s jevons paradox, which means, “we’ll spend more on what gets more productive”, and there’s the baumol effect, which means, “we’ll spend more on what doesn’t get more productive.” and both of them are top of mind right now, as we watch in awe at what is happening with ai capex spend. Rebound efects undermine the assumption that improved technical eficiency alone will ensure net reductions in environmental harm. Today’s entry is brought to us by alex danco in why ac is cheap, but ac repair is a luxury
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100 years after jevons published his observation on coal, william baumol published a short paper investigating why so many orchestras, theaters, and opera companies were running out of money.
What do jevon’s paradox and baumol effect have to do with the ai supercycle
In “why ac is cheap, but ac repair is a luxury”, a16z writer alex danco explains how both phenomena will impact. Top news and commentary for technology's leaders, from all around the web. The baumol effect & jevons paradox are 2 claims regarding the effect of increasing efficiency of a good or sector Although not incompatible, they are at odds
One suggesting relative decline, the other suggesting absolute growth.
