It is a natural conclusion to make that more efficient things consume less. This is true on a micro scale: a car with greater fuel efficiency uses less fuel. However, at the macro scale, this is not the case. The Jevon’s Paradox is an observed paradox in economics which states that greater efficiency causes greater consumption at the collective scale. The mechanism for this is what Canadian economist Blair Fix calls “technological sprawl”: as a system gets more efficient, it gets cheaper. And because it gets cheaper, we tend to use more of it, often disproportionately.

Fix cites the evolution of the computer as an example. Computers went from power-hungry machines that required entire rooms to be housed in, to microscopic chips with trillions of times the computational power at the same level of energy consumption. Instead of reinvesting those energy gains, we actually decided to spend more computational energy by putting computers in everything: schools, businesses, houses, cars, pockets, and toaster ovens. Another example he cites is the hash efficiency of Bitcoin vs global Bitcoin energy usage: as Bitcoin experienced a million-fold hash efficiency improvement, the Bitcoin network used a million times more electricity. More efficiency, more consumption.

This isn’t just a human phenomenon; it appears to be a law of nature. Fix’s own study on energy efficiency vs energy consumption across thousands of species of animals showed the same result: more efficient animals (in watts per kilogram of bodymass) consumed more, not less, energy. Sprawl is natural.

I’m not an economist, but it seems to me that this phenomenon applies to price as well. A lower price means you can get more of a thing for the same amount of dollars. That’s a kind of efficiency, it’s just dollar-efficiency, not energy-efficiency. Applying the Jevon’s Paradox, we conclude that lower prices cause people to spend disproportionately more money, not less money. Buying cheap things catalyzes spending sprawl.

If this is true, and if you’re conscious about building wealth, you will see this as a competitive edge: stop buying cheap things, and you will spend less overall. Sounds counterintuitive, right? Let me explain.

Consider Amazon Prime. Prior to Amazon Prime, buying online was expensive due to shipping costs. Online products were also more niche and specialized, meaning they were more expensive; an online purchase was a necessity if you couldn’t buy the thing elsewhere locally. Amazon created unprecedented dollar efficiency: free, two day shipping on cheap Chinese everything-junk! The result, anecdotally, is that we all to buy more of it, we don’t just spend less on what we were going to buy. Consider how many times the Prime truck shows up at your door in a week, and what kinds of things they deliver, or how many Amazon warehouses there are now. That’s spending sprawl.

Technologies are not monoliths, they are trees. Every technology has dependencies. A simple hand tool, like a hammer, is a technology. To make and maintain the hammer, you need other things, such as wood for the handle, means of harvesting and shaping and treating that wood, iron for the head, and means of extracting, shaping, carborizing, and keeping the head from rusting. Each of these things depends on other technologies. When you really think it through, even a humble hammer has a pretty big tree of dependencies.

These trees of dependencies get much bigger for modern technologies. Your car, for example, has a massive tree of dependencies. It needs oil and gas and means of extracting and refining those, along with a myriad of other engineered fluids. Building it requires loads of dependencies, from metallurgical technologies, to robotics, to machining, to roads, etc., and each of those has a load of dependencies as well. When you consider technologies in this way, you realize just how fragile modern technologies are, and what a miracle it is that anything works at all. Any break in the dependency tree breaks the technology as well. But that’s beside the point of this article; while I would argue that sustaining fragility is an economic cost that needs to be considered (fragile things are more expensive to insure than robust things), there is a more tangible cost to modern technology: everything in the dependency tree costs something.

I’m relatively handy: I do most of my own housework and some of my own automechanics work. It often amazes me how much stuff I have to own and buy to keep all my other stuff going. Over the years I’ve amassed my own collection of tools, fluids, and accessories just to keep everything in working order. Even some of these things need to be maintained or repurchased over time. If you let someone else do all the work for you, it only moves the problem one level down: that person requires all the same tools and materials as you plus overhead for their time. That’s sprawl, and it’s necessary to maintain almost anything in the modern world.

The granddaddy of dollar efficiency in personal finance is cheap debt. Debt is the exchange of future money for present money: you exchange future payments of principal and interest over the life of the loan for a lump sum of the amount of the loan in the present. The cost of debt is called the interest rate. The lower the interest rate, the cheaper the debt. This means a greater the dollar efficiency in obtaining the lump sum, a.k.a. your future dollar goes further in obtaining the principal of the loan. Apply the Jevon’s Paradox: when interest rates are low, people don’t choose to keep their planned principal amount the same and save on the lifetime cost of the loan. They get bigger loans. Expensive debt is taken only when absolutely necessary, but cheap debt is used for everything: bigger houses, expensive cars, more cars, fancy phones and computers, home renovations, you name it. That’s sprawl. All of these purchases are technologies, and all technologies have dependencies, and dependencies (being themselves technologies or raw materials) have costs. Bigger houses cost more to insure, heat, cool, power, clean, and maintain. Bigger cars cost more too, and so do more cars. Even though your monthly payments on your debts remained the same as they would have with a higher interest rate, you are now spending far more on using and maintaining all this extra stuff. All of this is extra unanticipated non-debt-related spending, yet it was catalyzed by cheap debt.

In sum, the Jevon’s Paradox tells us that an abundance of cheap goods are actually a catalyst of spending sprawl. When it comes to everything we could spend our dollars on in the modern world, my wife’s grandfather says it best: “I can’t afford to save that much.” The solution, it seems to me, is to say “no” to as many of the cheap modern temptations as you can by simplifying your life. Pay your debts, sell your extra stuff, and cancel your subscriptions. Ask yourself what you really need, and how little you could live on and still be happy. Seek simpler (and often older) solutions to problems that people have had since the dawn of time, such as how to store food, travel, heat your home, entertain yourself, etc. Sprawl is disorder, but man’s task is dominion.

There is that maketh himself rich, yet hath nothing: there is that maketh himself poor, yet hath great riches. (Proverbs 13:7)