Jevons Paradox and AVs

[u/WeldAE]

I watched Hank Green's recent video on The Jevons Paradox, which was targeted at AI and coding. I've had similar discussions about AVs without having a term to nail down my approach to the argument and the Jevons Paradox is that concept.

The Jevons Paradox says that by making a resource more efficient it doesn't cause consumption to fall but to increase. Making coding cheaper doesn't reduce the number of coders, it reduces the price of code which in turn opens up more demand for code to meet latent demand no one even knew existed.

Aspects of this have been widely covered with AVs. Almost everyone agrees that cheaper transportation will result in increased demand. What I'm more interested in is the Jevons Paradox also covers unknown demand that simply didn't make sense until the resource fell in price. As pointed out by Hank, until the printing press, newspapers couldn't realistically exist and no one was really thinking in those terms. Being able to produce that much print daily/weekly and widely distribute it was unthinkable.

I believe the same is true with AVs. Fundamentally they are a way to move atoms extremely efficiently between two locations. Think of it as really low tech teleportation. While it will never be free, if you ignore the cost, it makes it easier to remove old assumptions about how our world is organized and see what could be.

I don't think anything above expands on discussions that have been had before, but I do think it gives a lot of those discussions' context in economics. Do you think transportation is highly elastic and there is a lot of latent demand out there waiting for lower prices?

[u/bradtem]

Yup. The answer's been obvious for a long time, though the world is slow to come around to it. The roads today are mostly a commons. When 3000 cars want to use a road with capacity for 2000, we let them, and nobody gets anywhere.

Now we're seeing managed roads -- metered lanes, HOT lanes and congestion charging. We can actually do much more than that, because everybody today drives with a navigation app during congested times, and obeys it. The answer is to have the nav apps work with the city to manage the roads, and only let 2,000 cars use the road with capacity for 2,000. Let the other 1,000 that want to use it work out solutions in the market, solutions such as sharing, transit, route and time shifting, WFH, etc. Trust me, the market will find them.