Jevons Paradox vs. Moore’s Law: Why We Always Underestimate Technology's Future

Why Jevons Paradox and Moore’s Law Prove We’re Always Underestimating Technology

There’s something hilarious about looking back at past predictions about technology. The one that always gets me? That infamous (possibly misattributed) Bill Gates quote: "No one will ever need more than 64K of memory." Oh, Bill. How adorable. Today, I have individual memes that take up more storage than that.

But this isn’t just about Gates and his 64K moment - this is a broader pattern. Humans, despite all our brilliance, are spectacularly bad at predicting how much of a good thing we’ll use once it becomes more efficient. Enter: Jevons Paradox.

Jevons Paradox: The "Oh, We’ll Just Use More of It" Effect

Back in the 19th century, a British economist, William Stanley Jevons, noticed something weird. As steam engines became more efficient at burning coal, people didn’t use less coal. They used more. The cheaper and more efficient something becomes, the more people lean into it.

Fast forward to today, and AI is proving Jevons right again. The cost of AI models is dropping, their intelligence is skyrocketing, and guess what? Instead of slowing down, we’re cramming AI into every possible application. From writing our emails to generating cat pictures, we just keep using more AI.

Moore’s Law: The "Tech Gets Faster, and We Want Even More" Effect

Now, let's talk about Moore’s Law. In 1965, Gordon Moore predicted that the number of transistors on a chip would double every couple of years, making computers exponentially faster and cheaper. He was right - for decades.

This is why your phone today is more powerful than the computer that sent astronauts to the moon. And yet, somehow, it still feels sluggish when you have 37 Chrome tabs open. Why? Because every time computing power increases, we find new, more demanding applications. We’re like kids who get a bigger toy box and immediately demand even bigger toys.

Jevons vs. Moore: The Ultimate Tech Showdown

Jevons Paradox and Moore’s Law are basically two sides of the same coin:

• Moore’s Law predicts that technology will keep getting exponentially better.
• Jevons Paradox predicts that as it does, we’ll use even more of it than we ever thought we would.

The result? A never-ending cycle where efficiency fuels demand, and demand fuels even more advancements. It’s why “no one needs more than 64K” turned into “no one needs more than GPT-5” which will, inevitably, turn into “no one needs more than GPT-10” before we all start casually chatting with AI versions of ourselves in the metaverse.

The Lesson: Never Underestimate Our Ability to Want More

So, what can we learn from all this? First, any time someone says, “We’ll never need more than [X],” get ready to laugh at them in about a decade. Second, AI and computing aren’t slowing down—they’re accelerating. And if history has taught us anything, it’s that efficiency doesn’t reduce demand. It makes us want way more of the thing.

Which brings me to the final question: how long before we start saying, “Nobody will ever need more than AI that can run the entire world economy in real time”?

I’d give it about five years. Maybe less if Moore and Jevons have anything to say about it.

Will the Real Demographic Dividend Group Please Stand Up?

When we talk about the demographic dividend, it’s usually a celebration of the young - the bustling, ambitious, and energetic crowd in their mid-twenties. This group is often heralded as the economic engine of a nation, the labor force that drives GDP growth. But here’s a question worth pondering: Does consumption or savings contribute more to the economy? And if it’s savings, then maybe we’ve been looking at the wrong demographic all along.

Let’s peel back the layers of this argument.

The Traditional View: The Young Workforce as the Demographic Dividend

The term demographic dividend often paints a rosy picture of a young population entering the workforce. With a median age in the mid-twenties, these individuals are assumed to fuel economic growth by earning and spending, thus powering consumption and productivity. But does this narrative tell the whole story?

For an economy to truly thrive, there’s another crucial component: savings. And here’s where the story takes a surprising turn.

A New Perspective: The 50+ Age Group as the Real Economic Pillars

If we shift our focus from consumption to savings, it becomes clear that the 50+ age group plays a far more significant role in sustaining an economy. This is the stage in life where people experience a financial sweet spot - a combination of reduced financial burdens and peak earnings.

Here’s why your 50s might just make you part of the real demographic dividend:

1. Peak earning years

By the time you hit your 50s, you’re likely at the height of your career. The promotions have rolled in, the raises have added up, and you’re earning more than ever before. This surplus income creates a strong base for significant savings.

2. Debt-free living

Those pesky EMIs that once ate into your monthly income? Gone. By this stage, most people have paid off their home and car loans, leaving more room for investments and savings.

3. No tuition fees

If you’ve been funding your children’s education, chances are that expense is no longer on your plate. No more tuition fees means more financial freedom.

4. No big purchases

In your 50s, you’ve likely ticked off all the big-ticket items - your dream home, a reliable car, maybe even that long-desired vacation. With fewer major expenses, you can focus on building wealth.

5. Reduced insurance costs

Long-term insurance policies you purchased years ago are often fully paid by this time, reducing your financial outflow even further.

Savings vs. Consumption: What Drives the Economy?

While consumption is an important driver of economic growth, savings play a foundational role in creating long-term financial stability. Savings fuel investments, which in turn generate jobs and infrastructure. Countries with higher savings rates often have stronger, more resilient economies.

When we frame the demographic dividend around savings rather than consumption, the narrative shifts. The 50+ age group emerges as an unsung hero, quietly contributing to economic stability through prudent financial decisions and wealth creation.

So, let’s give credit where it’s due. Your 50s are not just about winding down - they’re about winding up your financial legacy. With fewer expenses, higher earnings, and the wisdom to save, this is the decade that can truly power the economy.

Perhaps it’s time we stop exclusively championing the youth as the face of the demographic dividend. Instead, let’s celebrate the contributions of those in their 50s and beyond (the 1970's born Generation as in my case) individuals who, through disciplined savings and thoughtful planning, provide the financial backbone of a thriving economy.

So, will the real demographic dividend group please stand up? If you’re in your 50s, chances are, it’s you. Take a bow - you’ve earned it.