Conference Agenda

Rebound effects—the increase in energy use following improvements in energy efficiency—are often cited as a fundamental obstacle to technological solutions to climate change. In response, sufficiency—understood as voluntary, welfare-enhancing reductions in demand—is increasingly proposed as a complement to efficiency but remains largely absent from macroeconomic models. We introduce sufficiency into a directed technical change model with energy–capital complementarity by incorporating a labor–leisure trade-off. Interpreting higher leisure valuation as sufficiency, we examine how demand-side restraint interacts with endogenous innovation after an energy-efficiency shock. We find that transitory sufficiency reduces energy use only temporarily and does not prevent rebound, while permanent shifts toward leisure lower steady-state energy use and eliminate long-run backfire. However, sufficiency also weakens incentives for energy-saving innovation by reducing energy prices. Sufficiency curbs rebound only if it is persistent.