I just meant that it is an economic idea not an engineering one - the resource of public highways cannot be managed efficiently, as long as it is free to use.
I don't know much about what's taught in civil engineering programs, so can't say who knew what when. But the induced demand paradox is named after economists Pigou and Knight (who did most of their work 1910-1940) and political scientist/economist Downs (did most of his work 1950-70). Traffic engineers were clearly widening expressways for a long time after these guys had written down the induced demand idea.