In 1865, William Stanley Jevons realised that coal consumption had increased dramatically, all despite the fact that James Watt's steam engine was much more efficient than Thomas Newcomen's. In other words, much more was being spent than before, despite the fact that the efficiency of processes and machinery had improved remarkably. How was this possible?
The truth is that this type of consumption pattern is not exclusive to the 1800s, but today homes can also suffer this phenomenon with the arrival of an increasing number of devices in our lives.
What is the growing cost trap?
Many of us can’t seem to save when we get a salary increase or when a major expense is eliminated (for example, when we stop paying for our car). We have extra money that, without realising it, disappears and we incorporate into our daily consumption.
But why does this happen?
The key concept here is the so-called growing cost trap.
We have the ability to spend more due to the increase in purchasing power, either due to higher income or lower costs. That is, we spend because we can adjust to a higher expense.
This is why when someone wins the lottery, they rarely keep their fortune for many years. Something similar happens with salary increases.
We are used to a certain level of spending, be it more or less, and this is also true of many habits that we acquire with technology. If we move up a level, we do not maintain spending, but we tend to match it to the new starting point.
For example, we tend to consume more if we notice that we have more money saved up or more money available in our pocket.
We see the same trap of increased spending when the price of the object we spend on is cheaper, even slightly. This is the case of low-cost fast food. The falling prices have led to an increase in the amount of food of this type that is eaten; or in the case of internet consumption, in the number of gigs that telephone companies give us for the same rate, which always seem to fall short despite continuing to increase.
This same behaviour is also transferred to energy consumption in the home, with users who tend to spend just because they can (they leave lights on, do not switch to LEDs, do not turn off the oven minutes before the food is finished cooking, etc.) without realising that a change in habits could give them significant benefits in personal savings.
Similarly, despite the fact that we have devices that improve and facilitate our day-to-day lives in ever smarter ways, we still do not optimise our resources in order to help us save. The arrival of a device that helps us efficiently is not always synonymous with reducing costs.