What is Jevons Paradox?
Jevons Paradox
Jevons Paradox is the economic observation that as a resource becomes more efficient to use, consumption of that resource tends to increase rather than decrease. In the context of AI, the concept is invoked to argue that cheaper, more capable AI will expand demand for AI-driven work and services, rather than simply displacing human labor.
How it developed
- Feb 2026 – Dara Khosrowshahi cited Jevons Paradox to explain how improving ride-hailing efficiency expanded the market far beyond the initial taxi industry size, suggesting similar dynamics could apply to AI.
- Jul 2026 – Shaan Puri argued that as code becomes cheaper, demand for it will increase significantly, countering fears that AI will put people out of work.
- Aug 2026 – Adam Liebman said Jevons Paradox “ends up being very true with high agency people,” because AI unlocks a golden era for those who can leverage it effectively.
In the evidence
Every line below is attributed to a named speaker.
Jevons paradox explains Uber's scale: radically improving convenience or cutting cost expands total market size far beyond the original addressable market of black cars and taxis.
“To your point on Jevons paradox to some extent, people thought, 'Well, what's the size of the black car market place?' And it was a couple billion dollars. Or what's the size of the taxi industry? And it was more than a couple billion dollars. But what they didn't see at the time was that as you improve the if you radically make something either more convenient or cheaper the market expands beyond how you calculate it. So the Uber size and scale now is way beyond the original marketplace of black cars and or taxis. It's the company The company today is a result of Jevons.”Dara Khosrowshahi · 23 Feb 2026
Jevons paradox applied to hiring: AI efficiency gains make it rational to employ MORE high-agency people, not fewer.
“Jeban's paradox, this idea that as a resource becomes more efficient, it becomes rational to use more of that resource ends up being very true with high agency people because AI unlocks the golden era for high agency people.”Adam Liebman · 19 Aug 2026
Jevons paradox applied to AI: cheaper code lowers cost, which massively increases demand for code, producing a net expansion of coding jobs rather than their elimination.
“A lot of people are saying that AI is going to put people out of work. I think it is the exact opposite. I believe that code will get more cheap, therefore demand will increase a significant amount to the point that we can't even understand.”Shaan Puri · 23 Jul 2026
Shaan Puri argues AI will create more jobs than it destroys because cheaper code dramatically expands demand for code, consistent with Jevons paradox.
“A lot of people are saying that AI is going to put people out of work. I think it is the exact opposite. I believe that code will get more cheap, therefore demand will increase a significant amount to the point that we can't even understand.”Shaan Puri · 23 Jul 2026