Is Jevon's paradox just elasticity of demand?

tl;dr: yes

As generative AI promises to dramatically reduce the cost of software, people are bringing up Jevons paradox to assuage fears of industry-wide redundancy. Economics is filled with many fun paradoxes, but this was a new one, so I dug in. From le wik

The Jevons paradox was first described by the English economist William Stanley Jevons in his 1865 book The Coal Question. Jevons observed that England's consumption of coal soared after James Watt introduced the Watt steam engine, which greatly improved the efficiency of the coal-fired steam engine from Thomas Newcomen's earlier design. Watt's innovations made coal a more cost-effective power source, leading to the increased use of the steam engine in a wide range of industries. This in turn increased total coal consumption, even as the amount of coal required for any particular application fell. Jevons argued that improvements in fuel efficiency tend to increase (rather than decrease) fuel use, writing: "It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth."^[6]

This seems to be a case where the elasticity of demand is so high, that a reduction in price increases overall consumption even the units consumed per use fall. In software, since it is already a zero marginal cost good, I interpret this as applying software to many novel (and more marginal) which weren’t worth bothering with before.

However, others argue that the true cost of software is in the maintenance and ongoing security especially if it’s connected to the internet, so cheaper upfront development doesn’t really matter.

Perhaps that will then resolve the paradox: more specialized genAI front ends, and a vast industry of developers who figure out how to keep it all running and secure. Tracking monitoring and security SaaS companies may show us which way things are moving.