Brad DeLong has just posted a couple of links to articles that attack an article by David Owen in the New Yorker [subscription required]. Owen’s article relied heavily on the claim that increased energy efficiency doesn’t really deliver the hoped-for environmental benefits, because of something called the “rebound effect”. Here’s an explanation of that effect by James Barrett in one of the linked pieces:
In essence the rebound effect is the fact that as energy efficiency goes up, using energy consuming products becomes less expensive, which in turn leads us to consume more energy. Jevons’ claim was that this rebound effect would be so large that increasing energy efficiency would not decrease energy use….
Owen’s critics say that although the rebound effect is real, whether it is large enough to have the effects Owen claims is an empirical matter, and they are sceptical. Basically, they argue that the increase in energy consumption is not just down to lower prices but also to greater wealth, house size, etc. and so without greater efficiency, we might be consuming a whole lot more energy than we actually are. Basically: it all depends on the facts, and the jury’s out.
Ok, so now let’s do a little substitution in that sentence quoted earlier.
In essence the rebound effect is the fact that as labor efficiency goes up, using labor consuming products becomes less expensive, which in turn leads us to consume more labor. [The] claim was that this rebound effect would be so large that increasing labor efficiency would not decrease labor use….
The amended claim reads as the response those same economists might make to Luddites everywhere. “Don’t worry, the new technology will not put you out of work!” Or perhaps, more honestly, “even if the new technology puts some people out of work for a bit, it will not reduce and may even increase demand for labour, and people will be better off.”
Now I’m not an economist, just an interested consumer of what economists have to say, trying to make sense of that in my own dull-witted way. Professor DeLong hasn’t always been kind to me in the past, so, if he responds to this post, let me urge him to imagine himself in the role of the educator who is saying to the class: “if you have a question, don’t be afraid to ask it in case it is stupid, someone else is probably having the same thought as you, and you’ll help to clear things up.”
So my question is: why do [at least some] economists respond to the claim about energy efficiency with “its an empirical matter”, whilst chanting “lump of labour fallacy!” at people who worry that technological change will cost jobs? Why is one a matter of looking at the evidence, whilst the other is determined more or less a priori ?
[Disclosure: I’ve been led to some of these thoughts by following a comment to one of these articles by this guy, whose bona fides I cannot vouch for, but who seems, to this non-economist, somewhat interesting.]