Rebound Effect

When efficiency improvements reduce the cost of using a resource, people use more of it. A fuel-efficient car is cheaper to drive, so people drive more miles. The efficiency gain is partially offset (or entirely reversed) by increased use.

Economists distinguish levels:

• Direct rebound: Using more of the cheaper service (driving more with an efficient car)
• Indirect rebound: Spending savings on other consumption
• Economy-wide rebound: Efficiency enables new applications and economic growth

When rebound exceeds 100%, total consumption increases despite efficiency gains. This is the Jevons paradox — named after William Stanley Jevons, who observed in 1865 that more efficient steam engines increased total coal consumption.

Related: jevons paradox