The Rebound Effect

Why energy efficiency sometimes saves less than expected because people use more, from Jevons's coal paradox to air conditioners today.

If you buy a more efficient air conditioner, you might run it longer because it’s cheaper to use. The energy savings are partly offset. This is the rebound effect.

Jevons’s paradox

In 1865, economist William Stanley Jevons observed that more efficient steam engines in Britain led to more coal use, not less, because efficiency made coal-powered activities cheaper and more widespread. This is called the Jevons paradox.

Types of rebound

Direct rebound: using more of the same service, like driving more in a fuel-efficient car.
Indirect rebound: spending money saved on other goods that use energy, like a holiday flight.
Economy-wide rebound: efficiency boosts growth, raising overall energy use.

How big is it?

Studies suggest direct rebound for many household services is often modest, perhaps 10 to 30 percent of expected savings, though it can be higher in some cases, especially where people previously couldn’t afford enough of a service.

Is rebound bad?

Not necessarily. If a poor household can finally afford to cool its home in a heatwave, that improves welfare. Rebound shows that efficiency makes life better, even when savings are smaller than expected.

Policy implications

Efficiency alone may not cut total emissions enough.
Combining efficiency with carbon pricing or cleaner energy limits rebound’s climate effects.

The efficient AC

A family replaces an old AC with an efficient inverter model. Because cooling now costs less, they run it for more hours. Their bill falls, but by less than the efficiency gain alone would suggest.

Thinking efficiency always saves exactly what engineers predict

People often use more when things become cheaper, reducing savings.

Key takeaways

The rebound effect means efficiency gains are partly offset by more use.
Jevons (1865) found more efficient engines increased coal use.
Direct rebound is often around 10 to 30 percent for household services.
Rebound can improve welfare; carbon pricing limits its climate effects.