The Rule of Diminishing Marginal Return

There is a well-known law in economics called the ‘Law of Diminishing Marginal Utility’, which states that as consumption of a good or service increases per unit, the satisfaction derived from consuming an additional unit or more will lead to a subsequent decline in its overall utility. In other words, the more you consume, the less satisfied you will be with each additional product or service you purchase. The first thing you buy, use, or consume will be the most satisfying but the 2nd, 3rd, or 4th unit of the same item you utilize will not be as useful and could even not satisfy you at all.

This fundamental law in basic economics is one that is worth memorizing because it makes total sense. The first chocolate bar you consume will be delicious and fulfilling. You may not be satisfied with just one chocolate bar so you may end up eating another one since the first one was so tasty. However, anyone will tell you that the 2nd chocolate bar will not be as tasty or satisfying as the 1st one and you may even end up with a stomachache from eating too much chocolate if you are not careful.

The ‘Law of Diminishing Marginal Utility’ does not just apply to economic principles but goes far beyond that in terms of being applied to human psychology. The act of consumption, I would argue, is not just an economic one but also applies to the psychology of choice and how we live our lives. Everybody is a consumer in one way or another whether it’s the air we breathe, the water we drink, or the food we eat each day. Without any consumption, we would not survive but it is our choices that define our consumption habits and how we behave not just as economic actors but as human beings.

In a psychological context, instead of calling it the ‘Law of Diminishing Marginal Utility’, I would refer to it as the ‘Rule of Diminishing Marginal Return’, which is similar but discussing more how it’s a rule of life that the more we buy of something, the less return on that investment we will get out of it. The first of something whether that’s the purchase of a new car, a first trip to a new country, or the first time you try a new cuisine. These experiences will captivate you and do its job of putting your happiness level to a 9 or 10, but it’s a rule of life that it won’t stay there. While the memory of that experience will provide you with satisfaction and joy in its remembrance, your psychological state will revert to the norm of being level in terms of happiness or satisfaction with life. You may try to buy or consume more of something to recapture that feeling of happiness but that would actually be counterproductive in the long run and actually create false expectations compared to the first time you purchased or consumed that activity, experience, food, or drink.

How do you avoid the marginal returns of consuming, buying, or eating too much? Well, that is not easy to do but that is part of being a mature and responsible adult. You must have enough willpower and be able to reason with yourself that one more plate of food, one more drink, or one more car will not do the trick in giving you happiness. You must realize that your base level of happiness as a person won’t change as a result of consuming more and it may end up backfiring by causing your satisfaction to be lower because you consumed too much in the first place.
Being able to limit your consumption and controlling your vices will make you better off. If you can master your desires or your urges, then you can focus on bettering yourself or making you happier through more sustainable means. If you are working on personal projects, devoting yourself to a volunteer cause, or working on improving yourself mentally and/or physically, that kind of satisfaction will have a higher return on investment than just mindless consumption.

Consumption of goods and services may spike your happiness and satisfaction levels in the short run, but that kind of joy is short-lived and can often feel isolating if you are not sharing in that joy with others. That is why a meal with friends or family is often much better than eating by yourself. It’s why travelling with a close friend will generate more memories than a trip by yourself. It is not wrong to sometimes treat yourself to a nice meal, a nice trip, or a new gadget but shared experiences will make you happier and create more memories than those times that you were on your own in consuming.

One should carefully watch what they consume and monitor how much per day, per week, per month, and even per month they are consuming whether that’s food, drink, goods, etc. Everything in moderation is a good way to be as an adult and if you want to abstain entirely from consuming something, then that is an admirable thing to do as well. The worst thing you would want to do is to become overindulgent or overly reliant on a consumable good to make you happy or give you long-term satisfaction in life. You know better than anyone else the limits of your consumption and that true happiness is derived through shared experiences in life and of challenging yourself to be a better and more developed person.

In the long-term, I believe you get increased rather than diminished return through producing instead of consuming, by challenging yourself mentally and physically, and sharing yourself with others whether that’s through a good meal, a volunteer experience, or a worthwhile group project. All the chocolate and ice cream in the world won’t add to your happiness but would rather detract from it. A bowl of ice cream or a chocolate bar will satisfy you for a few hours, but you eventually will be back to that same level of happiness homeostasis that you had previously.

Instead of looking to keep yourself content or happy all of the time, know that happiness is not everything in life and that you benefit more from the hard work and the struggle that you put yourself on a daily basis than of just sitting on the couch and eating ice cream until the end of time.

When you get to that 2nd or 3rd bowl of ice cream, you should realize that you’re starting to get a stomachache and that you should stop yourself before you get sick. The diminishing marginal return of trying to seek out happiness through ice cream should be counteracted by getting off the couch and into the gym to start working out those extra calories you just gained.

By embracing the struggle of a gym workout and burning off all that ice cream, you’ll be sacrificing that short-term happiness for that long-term struggle but eventual satisfaction of improving yourself physically as a person and making yourself happier and healthier in the long-run as a direct result of your choices and decision-making. You should not be afraid to indulge a little bit every now and then but remember that life is better experienced in moderation and you should always watch what choices you are making as you go through your life as both a consumer and a producer.

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The Why of Standards

How do we define standards? What exactly do they mean to our society and the world as a whole? See, the thing about standards is that if they are not observed by everyone to some degree than what would be the point of having them in the first place. Having standards when it comes to behavior, dress, professionalism, ethics, etc. helps society to function and for people to live productive and healthy lives. Without having standards or not being beholden to anyone else will create a society of winner-take-all or every man or every woman for themselves, which is not only counterproductive but also self-destructive in the long run.

As defined by Dictionary.com, A ‘standard’ is defined as “something considered by an authority or by general consent as a basis of comparison; or an approved model.” It’s a general definition but you can see that creating a standard requires the consent of the society at large. Standards can be difficult or easy to enforce depending on how popular they are but the total absence of standards in different areas of life should be fought against as much as possible. Everybody has different standards but the key to keep in mind is whether a lack of standards or a complete abandonment of standards is making the local community or overall society worse off as a result.

We don’t think about it but basic standards helps create laws, rules, and regulations that keep society running well. When there are no standards in anything whether its’ with business, politics, dress, the environment, etc. then every individual man, woman, and child will suffer in some regard as a result. Another thing to keep in mind is that a lack of standards or standards that are burdensome and counterproductive also cause harm to us as well.

Standards change over time but there are certain ideals and beliefs that I think should stand the test of time. By this I mean that basic manners and politeness should always be observed, presenting yourself well in your outer dress and appearance depending on the setting is crucial, and that you add with basic integrity, decency, and honesty when doing business or leading as a member of your community. Standards over time for these particular areas should not change and should even become stronger so that the next generations do not forget how to act, behave, and be good.

Standards can be relaxed in a number of areas or they can be hardened in other areas depending upon the mood and whims of the larger society but those areas I listed above should be consistent and not be trifled with. When basic manners, integrity, and matters of presenting become optional rather than mandatory, it’s likely that the entire society will feel the ill effects of such an absence of standards rather quickly. Fundamentally, systemic societal issues such as corruption, violence, and poverty, which while they have a wide range of causes are still related to an absence of moral and behavioral standards.

In a free society, standards can most definitely change and be adapted to fit to the times but it has to be with the approval of the majority of those people in that society. Leaving standards to the whims of a few leaders can be cumbersome and even negligent especially if they themselves due not match the standards for which they should follow based on their leadership roles. Standards are best when they are created, managed, and enforced in a democratic fashion and where the majority of people in that society are able to follow those standards.

While we are all individuals, we are all still apart of a collective society and we have to sometimes sacrifice our personal standards when we come up against those standards of the larger society even when we may fundamentally disagree with them. No standard is perfect but if the society has collectively agreed upon those standards, then all of the people must abide by them to the best of their ability. If the standards are to be changed, that should be done over time with the consent of the majority. Even if we don’t like the standards, if no one agrees to them, then they are not standards anymore and society could suffer as a result.

If you don’t like the absence of certain standards or believe that they are too burdensome on you or people that you know, then you need to make the effort and put in the work to change these standards. If you don’t like with how someone is behaving, then you need to make an informed argument as to how that person should behave in a more polite and decent manner. If you see some form of corruption and certain political leaders are letting it slide, then you need to take some responsibility in holding yourself first to a higher standard and then calling out that corruption to get others behind you so that the corruption may end in the future.

Individuals have power in a society with standards but they will fundamentally have less power in a society where there are weak standards or none at all. That is also the case where one sole individual can set standards for everyone else without so much as a protest from others, which is also dangerous and detrimental to society as a whole.

While standards such as for behavior, dress, professionalism, ethics, etc. may not always be popular to uphold, these standards form the backbone of the collective society. With the absence of any sort of standards comes at the behest of laws, rules, regulations, and principles as well. Standards form the base for a civilized society and in their absence; there is no way that a society of individuals can function at all.

When you read this article, think about your own standards and how they came to be in your thinking. Also, think about how important they are to you. Lastly, think about the current standards of your society and how long it took for them to be formed and implemented as well as how important they also are regardless if you agree with their being in existence or not. Standards are not meant to be popular all the time but they are meant to ensure codes of conduct in various manners of life.

The sheer absence of standards leads to an anarchy of sorts that would render polite society meaningless and turn individuals against each other in a collective free-for-all. Understanding the why of standards will make you more likely to improve and better your own existing ones.