Economics can be a maddeningly counterintuitive blend of art, science, and luck. Here are three situations where economic expectations don’t seem to line up with reality.

Elusive energy

In the 1980s, economists Daniel Khazzoom and Leonard Brookes independently argued that higher energy efficiency leads to higher energy consumption. In 1992, the US economist Harry Saunders offered three proofs of the so-called Khazzoom–Brookes Postulate.

First, higher energy efficiency makes energy cheaper, which encourages more use of it. Second, higher energy efficiency leads to economic growth, which means there are more energy-hungry planes, trains, and automobiles to feed. And third, higher efficiency in any one bottleneck resource multiplies the activities that were formerly restrained by it. In other words, when a more fuel-efficient car is introduced, it results in more travel-related activities that, in sum, use more energy than the old car.

Drinking diamonds

If water is essential for survival, why is it so much cheaper than diamonds? One could argue that diamonds are rare, but less than one percent of the earth’s water is drinkable, and lack of clean drinking water brings illness to as many as 500 million people per year, and kills two million.