ai: jevons paradox and the future of software engineering

Jevon’s Paradox is my all-time favorite paradox (doesn’t everybody have one?), one of those concepts that reshapes how you think about the nuts and bolts of the world.

Named after 19th-century economist William Stanley Jevons, the paradox observes that making a resource more efficient leads to more, not less, consumption of that resource.

The driving example is energy. Suppose power plants become twice as efficient, burning half the fuel to produce the same amount of energy. The naive assumption would be that society would use half as much fuel. But in practice, as energy becomes cheaper and more accessible, new use cases emerge. Instead of using less fuel, we use more: heating entire homes, producing more in our factories, and inventing entirely new markets.

Skipping over the implications for energy “conservation,” let’s move on to software and AI.

The Paradox of AI Efficiency

AI is transforming software engineering. By automating repetitive tasks and assisting with complex coding, AI dramatically increases the efficiency of software engineers—the resource in this scenario. As in Jevon’s day, many argue (or rather, assume) that this efficiency will reduce demand for software engineers, making the profession obsolete.

But the precedent of Jevon’s Paradox predicts an outcome that many will find surprising (but most software engineers will not).

As software engineers become more efficient, the cost of creating software decreases. This opens the door to new applications, industries, and innovations that were previously impossible or impractical. The result? Greater demand for software engineers, not less.

We’ve already seen this dynamic play out in history. When personal computers became more efficient and affordable, the demand for them exploded. As compute time become cheaper, the demand for compute time— that is, software— exploded, spawning entirely new industries, only increasing the demand for more compute. AI is poised to have a similar effect: expanding the reach of software into untapped markets and niches, creating more work for engineers.

A Higher Bar for Engineers

This doesn’t mean your cushy software job is secure. The landscape is changing.

AI makes effective engineers more efficient— it also makes ineffective engineers more obviously inefficient. When one skilled engineer can accomplish what used to take 20, there’s less room for mediocrity. Lazy, incompetent, or stagnant engineers (or businesses) will find it increasingly difficult to hide in large organizations or justify their roles.

In other words, the bar is rising.

Does Jevon’s Paradox Really Apply?

I appreciate your skepticism.

Ponder the primary prerequisites for the pertinence of this particular paradox:

1. Elasticity of supply (software developers)
2. Elasticity of demand (market appetite for software)

(In other words, price elasticity)

Those new to the topic may find point 2 surprising: Is there really that much demand for new software? This has been addressed famously in the Andreesen Horowitz essay, Why Software Is Eating the World.

Marc was right. Software was eating the world. And year after year, its maw is not closed, its appetite not satisfied.

In other words, the market for software has continued to surprise everyone, and it shows no signs of stopping.

If you find any of this particulary surprising, I encourage you to dig into Jevon’s Paradox until your intuition matches reality, and you start to see the implications everywhere.