How wonderful that we have met with a paradox. Now we have some hope of making progress.
- Niels Bohr
Economist William Stanley Jevons (1835-1882) is best known today for work he did as a kind of side hustle. A polymath in an era when that term still meant something, the Liverpool-born Jevons did work in a dizzying number of fields, including chemistry (a degree he didn't complete), mathematics and logic (a degree he did complete), railway policy, meteorology, land use, cloud formation, gunpowder, and geology. And there were more.
Like many of his era, Jevons was a mess of contradictions. He was a college dropout turned laborer, turned college re-entrant, turned academic, and eventually a public intellectual. Among the best-known and most respected economic thinkers of his time, he suffered from uncertainty, many physical ailments, depression, and insomnia Jevons was a deep thinker, obsessed with certainty and evidence and logic and maths, and yet verged on crankish when it came to race, arguing, for example, that the Irish were a separate race, one that couldn't be trusted given their tendency to public drunkenness.
The Irish couldn't be trusted, according to Jevons
Jevons' work, however, was the thing. He had a mostly favorable reception from fellow economists, including Alfred Marshall and, posthumously, John Maynard Keynes. Having said that, Keynes faulted Jevons (Essays in Biography, 1933) for being excitable in his discoveries, compared to the painstaking Marshall, "Jevons saw the kettle boil and cried out with the delighted voice of a child; Marshall too had seen the kettle boil and sat down silently to build an engine". Jevons had a less favorable relationship with philosopher John Stuart Mill, with whom he had a running, life-long squabble, one only ended by the former's early death, to which we will return in part two of this note.
Today, however, Jevons is best known for two things. First, independently, but at the same time as two contemporaries, he first described marginal utility (he called it "final" not marginal) in a form similar to how it is now used in economics. This is the idea that the value of something in a functioning market is not driven by the cost to produce it, but by the value given it at the margin. In particular, it refers to the additional satisfaction or value a consumer gets from one additional unit of a thing. While the additional satisfaction gained from each successive unit generally falls, it can be also positive or even zero.
It can be useful to think of marginal utility in martini terms. One is good, two is better, and three is a disaster. The utility of a thing can go up with more consumed, and then flatline, and even fall. (The humorist James Thurber put it differently, once writing, "One martini is all right. Two are too many, and three are not enough", representing a less common utility function).