Many economists of all persuasions, whether pro environmentalist or otherwise, seem united in their conviction that improving energy efficiency through technological means, could by lowering the implicit price, result in increased, not decreased, energy use, an effect called the Khazzoom-Brookes postulate (or hypothesis). This conviction is the result of over a century - since Jevons in the 1860s - of theoretical discussion on resource use, and empirical evidence from historic analysis of energy use in economies. ... A dissenting voice is that of Richard Howarth. He questions both the conceptual underpinnings and the empirical evidence for this effect. According to his model improved energy efficiency cannot give rise to increased energy use except under implausible assumptions (Howarth 1997). His model (using a Leontieff formulation rather than a Cobb-Douglas function for the energy service sector) and hence his conclusions, will no doubt will be challenged by other economists. To resolve this issue is no easy task. Howarth (1997) comments: Sorting out the empirical dimensions of the Khazzoom-Brookes hypothesis...would require detailed models that merge engineering approaches to energy efficiency, microengineering studies of the demand for energy services, and macroeconomic models of savings and investments. The construction of such models is an ambitious task... Perhaps the KB hypothesis should be analysed more as history than as economics. Richard Howarth again (1998) makes some very pertinent comments, which may pave the way for future research paths, when he remarks: ...the Khazzoom-Brookes hypothesis is most credibly grounded on the story of the steam engine, coal and the Industrial Revolution. In important respects economic history, evolutionary economics, and institutional economics shed more light on this issue than neoclassical growth theory. One can specify growth models that account for the stylised facts surrounding this development, but in a sense the event marked a type of structural change in technologies, lifestyles, and social institutions that transformed economic relationships rather than fostering smooth change in a continuous model.
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A dissenting voice is that of Richard Howarth. He questions both the conceptual underpinnings and the empirical evidence for this effect. According to his model improved energy efficiency cannot give rise to increased energy use except under implausible assumptions (Howarth 1997). His model (using a Leontieff formulation rather than a Cobb-Douglas function for the energy service sector) and hence his conclusions, will no doubt will be challenged by other economists.
To resolve this issue is no easy task. Howarth (1997) comments: Sorting out the empirical dimensions of the Khazzoom-Brookes hypothesis...would require detailed models that merge engineering approaches to energy efficiency, microengineering studies of the demand for energy services, and macroeconomic models of savings and investments. The construction of such models is an ambitious task...
Perhaps the KB hypothesis should be analysed more as history than as economics. Richard Howarth again (1998) makes some very pertinent comments, which may pave the way for future research paths, when he remarks: ...the Khazzoom-Brookes hypothesis is most credibly grounded on the story of the steam engine, coal and the Industrial Revolution. In important respects economic history, evolutionary economics, and institutional economics shed more light on this issue than neoclassical growth theory. One can specify growth models that account for the stylised facts surrounding this development, but in a sense the event marked a type of structural change in technologies, lifestyles, and social institutions that transformed economic relationships rather than fostering smooth change in a continuous model.
