{"id":103662,"date":"2026-07-18T03:00:56","date_gmt":"2026-07-18T07:00:56","guid":{"rendered":"https:\/\/quotulatiousness.ca\/blog\/?p=103662"},"modified":"2026-07-16T11:26:42","modified_gmt":"2026-07-16T15:26:42","slug":"jevons-and-baumol-and-why-they-matter-now","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2026\/07\/18\/jevons-and-baumol-and-why-they-matter-now\/","title":{"rendered":"Jevons and Baumol, and why they matter now"},"content":{"rendered":"

On the social media site formerly known as Twitter<\/em>, Matt Ridley<\/a> talks about the ideas of William Stanley Jevons and William Jack Baumol, whose ideas have become far more important over the last few decades:<\/p>\n

\"\"<\/a>

English mystery novelist Agatha Christie (1890-1976) at Schiphol Airport in Amsterdam on 17 September, 1964.
Photo by Joop van Bilsen for Anefo via Wikimedia Commons.<\/p><\/div>\n

Agatha Christie once remarked that she had never expected to grow rich enough to own a car or poor enough not to have servants. <\/p>\n

The reason this strikes us as bizarre today boils down to two names that you hear invoked a lot in the tech industry: Jevons and Baumol. One is shorthand for the expansion of products or professions with rising efficiency, the other for the shrinkage of products or professions with stagnant efficiency.<\/p>\n

There’s a pleasing chronological symmetry between these twin ideas: William Stanley Jevons coined the Jevons paradox in 1865; William Jack Baumol described Baumol’s cost disease exactly a century later in 1965.<\/p>\n

… For every industry that experiences efficiency gains, there’s another that does not. And this latter industry inevitably becomes less affordable. Baumol’s first example was string quartets: violinists are no more productive but you have to pay them more to prevent them running off to become software engineers. The productive industries drive up the labour costs in the rest of the economy. <\/p>\n

Marc Andreessen jokes that if a hole appears in the wall of your house in California these days it is probably cheaper to glue a flat-screen television over it than hire a builder to repair it: a Jevons-deflated cost beats a Baumol-inflated one.<\/p>\n

The big question of our age is can AI drag Baumol-shaded industries back into the sunlight of Jevons? Can it make things like healthcare, education, or government switch from rising costs to falling costs?<\/p>\n

I fear not in the case of government because of a bureaucratic version of the Jevons and Baumol effects. As Cyril Northcote Parkinson put it in an article in the Economist<\/em> in 1955: “Politicians and taxpayers have assumed (with occasional phases of doubt) that a rising total in the number of civil servants must reflect a growing volume of work to be done. Cynics, in questioning this belief, have imagined that the multiplication of officials must have left some of them idle or all of them able to work for shorter hours. But this is a matter in which faith and doubt seem equally misplaced.”<\/p>\n

Since 1997, the British public sector has seen zero increase in productivity. That is to say, the average civil servant generates about the same output today as he did three decades ago. <\/p>\n

Think about this for a second. Thirty years ago fax machines were high-tech, the internet was in its infancy, emails were new, Wi-Fi was scarce, mobile phones were voice-only. How is it remotely possible to be no more productive today than then?<\/p>\n

We know the answer. Each email is now copied to a dozen people, each report is pasted and copied till it is twice as long, each Zoom call has five times as many attendees, each mobile call is followed up by three times as many WhatsApp messages \u2013 and each day at the desk is interrupted by a training session on transgender anticolonial sustainability. That’s a sort of Jevons-Baumol effect: a Jevol?<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

On the social media site formerly known as Twitter, Matt Ridley talks about the ideas of William Stanley Jevons and William Jack Baumol, whose ideas have become far more important over the last few decades: Agatha Christie once remarked that she had never expected to grow rich enough to own a car or poor enough […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[8,831,25,7,15],"tags":[509,95,1026,326],"class_list":["post-103662","post","type-post","status-publish","format-standard","hentry","category-bureaucracy","category-business","category-economics","category-history","category-technology","tag-civilservice","tag-jobs","tag-microeconomics","tag-parkinsonslaw"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-qXY","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/103662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=103662"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/103662\/revisions"}],"predecessor-version":[{"id":103664,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/103662\/revisions\/103664"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=103662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=103662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=103662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}