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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Crave Discomfort

The mountain looks intimidating. You’re chilled to the bone as you make the final ascent. You didn’t think you were prepared for this moment but you wanted to push yourself to the physical limit. You made this hike not because it was easy but because it was hard. In order to understand your mentality and physicality better, you had to put yourself to the test.

There’s no other way to know what you are capable of than to test yourself and to do it often. It does not matter if you are cold, you are tired, you are hungry, you are sweaty, or you are sleepy, there are times in life when you must simply crave discomfort because you know deep down that you will be more fulfilled from pushing yourself than from having played it safe.

Imagine being on the side of that same mountain and you are rock climbing to get your way to the top. Each move that you make must be analyzed quickly so you don’t make a mistake. It’s likely that you will have a harness or some kind of restraint to catch you if you fall but that’s not always the case. You’re under a large amount of emotional stress and personal discomfort but you feel invigorated when you successfully climb or hike your way to the top. You’ll never regret those times when you put yourself out of your comfort zone especially when you are able to push yourself past those previously held limits that you thought you had.

There is no such thing as a challenge-free life. Putting yourself out there is going to be uncomfortable and you are going to be vulnerable. However, you may find that you will be the most fulfilled emotionally and physically when you challenge yourself. Discomfort as a concept may seem unappealing but it is in those moments or those times of discomfort where we advance the most.

Having the means of comfort may give short-term happiness but it is definitely unlikely to lead to long-term fulfillment. The only way to achieve satisfaction or fulfillment is to acclimate yourself to dealing with discomfort and being able to overcome it again and again. Being able to handle uncertainty will set you apart from other people and give you a level of maturity that will make you a stronger and more resilient person.

Discomfort does not only show up in the form of physical challenges but also in the realm of mental obstacles. Keeping your mind active by putting it to the test will improve you in numerous ways. Whether it’s reading a 400-page book, writing a research paper, or studying a foreign language, these mental challenges will definitely cause some discomfort and that’s a good thing. These personal projects will be very uncomfortable at first, but you will notice results when you stick with them, little bit by bit, and you’ll realize that the discomfort was worth it because of how far you have advanced with your mental development.

Living a life of ease and pleasure is not going to lead you to be the best person that you can become. Only by overcoming obstacles and meeting challenges will you be able to develop yourself fully. It’s good to kick back every now and then to relax and enjoy life yet that kind of pleasure is temporary. True personal growth lies in craving discomfort in whatever form it may yield the highest rewards for you. Whether it’s running a marathon or climbing a mountain to reach new physical capabilities or to writing a thesis paper for your doctorate or solving a complex physics equation, both our body and our mind need these challenges.

If you are ever feeling lethargic or lost, you should evaluate whether or not you are challenging yourself enough. Giving yourself personal goals to work towards will make you uncomfortable but you will also be able to greater fulfillment and longer lasting happiness. Being able to put yourself out there, use your physical and/or mental abilities, and logically think through and solve problems will get you out of your self-imposed funk.

Having a deeper purpose in life that is fulfilling and meaningful is necessary for everyone to pursue. Everybody will struggle at first to find out what exactly they were meant to do. Instead of doing nothing about it, I think it is best to try out different things that are uncomfortable to find out which challenges make you feel the most engaged and willing to overcome. Doing a bunch of different things to keep yourself active is better than to do nothing at all. Time is limited so it’s best to challenge yourself in a variety of ways first before you settle on the one or two major challenges in life that you want to succeed at.

Craving that discomfort is a necessary part of this part of self-development. Failure is possible and you may not ultimately succeed. However, if you fail, you will learn from having tried your hand at it and you will be the better person for it. Once you try at something, even without ultimate success, you know that you have the ability to take on challenges and eventually you’ll meet them without unease and with greater confidence. It is far better to have failed one hundred times and to have succeeded on your 101st try, then to have failed only once and then give up entirely without trying again.

Many people today shy away from being uncomfortable at all, even for a minute, but this is much to their detriment. Being in discomfort and going through painful times is part of being human. Without experiencing that pain and that discomfort, you won’t be able to become a stronger person. The person who has been through several trials by fire is the person you want around in times of discomfort and distress. You don’t want to be around a person who only indulges in pleasures and shies away from any pain.

Having physical toughness and mental fortitude to meet challenges head on are traits that you should want to make part of yourself for the rest of your life. Putting your fear and your doubts aside to climb that mountain, write that book, learn that language, or solve that Math problem will give you an advantage over others who deny themselves discomfort. You have to want to engage in the discomforts in life because in today’s day and age, it is easier than ever to avoid discomfort. Those who pursue discomfort will be rewarded long after the challenge(s) you set for yourself have been overcome.

Reaching The Gold Standard

‘The Gold Standard’ is a popular term that is used to describe the best quality and ideal that you can hold yourself to. The term of ‘gold standard’ has often been used to refer to the finance, medical, and other industries where people are trying to get the best outcome and live up to high expectations. The gold standard can also be a benchmark that can be set for yourself or a company that is trying to reach a goal that would be difficult to achieve but is still within the realm of possibility. Often times, when it comes to the gold standard, you’re going to be comparing two different options together and seeing which one falls within a closer range of that needed benchmark. According to Google, the official definition of a gold standard is when something or someone is “the best, the most reliable, or most prestigious kind of thing of its’ type.”

The correlation between something being golden and something being the best has been linked as being one in the same for a couple of decades now. It is often considered to be an analogy to the literal definition of a ‘gold standard’, which is when the value of a currency is defined in terms of its’ overall worth in gold. In this case, there are many different standards with gold being one of them when it comes to the finance world, especially when currencies are being compared to gold in terms of overall value. Since gold was seen as a reliable resource to base value off of, it was held to an increasingly high standard, which other currencies were able to base their own value on and see how much gold they could own on the world market. The gold standard can be defined when it comes to both economics but also in terms of behavior as a scientific factor.

As for the first modern usage of the gold standard, it is believed to have occurred originally in a written paper from 1979, explaining the scientific usage of the word. The paper was titled, “In search of the gold standard for compliance measurement.” In this same academic paper, the gold standard is linked directly to the ideal standard of being compliant. The excerpt from this article states that, “While other methodological problems are involved, these four highlight the absence of a real gold standard for compliance, the ideal standard would be…”

While the gold standard is often held as the ideal for currency exchanges, for medical advances, and for statistical accuracy, it can also be referencing a person’s behavior or conduct especially when it comes to business or personal matters. While the gold standard phrase may have been invented with finances or medicine in mind, the expression has become mainstream over the past couple of decades and is now used quite regularly when it comes to people’s achievements.

For example, if you are an Olympic athlete whose competing in a number of events, you are also being held to a ‘gold standard’ as you compete for a gold, silver, or bronze medal. The gold standard here is definitely the ideal standard that is held not just for athletes that are competing in the Olympics for all major sports.

In order to be the best, you need to hold yourself to your highest standards and work you’re hardest to win the gold medal. In our society, even before the phrasing of ‘gold standard’, striving for gold was seen as an endearing quality and that it often symbolically represents the best that you can achieve as an athlete who is competing in a tournament or championship. It seems to be no coincidence either that most of the trophies that you receive for coming in first place or for winning a competition are made out of gold, whether it is real or fake. The gold standard in sports is a concept that has been around for many decades and doesn’t seem to be going away anytime soon. Winning gold medals or trophies in competitions is strongly linked to being the best of the best, making it a significant part of the idea of the gold standard.

Beyond signifying personal achievements and athletic success, the idea of holding yourself personally to a gold standard of behavior is quite common in our society. When it comes to having the ideal behavior, you’re going to want to hold yourself accountable for your actions, and you need to have such qualities as being honest, fair, responsible, organized, and hard working.

Many businesses and companies, when they decide whether or not they are going to hire someone as their new employee evaluate if you hold yourself to a high standard of behavior or ethics. They do not want someone who is going to lie, cheat, and steal to make the company and your colleagues look bad. The idea of holding yourself to a gold standard is quite popular in many of today’s companies. Many contracts and work agreements come with behavioral clauses that lay out the do’s and don’ts of what they require of you as an employee when they decide to hire out. If you do not hold yourself to a ‘gold standard’ of behavior at work, you may be out of a job much quicker than you had imagined.

Outside of your work life, setting the gold standard of behavior in your home life is a good habit to practice. As an individual, you need to set the standard for your friends and your family as to how to act and behave as a member of a society. You need to show them that being kind, honest, hard-working, organized, and reliable are good qualities to have both at home and at work and that these are personal characteristics that should be emulated, and spread around as much as possible.

If your children or other family members see you behaving well at the grocery store by saying ‘please’ and ‘thank you’ to the workers as well as when you leave a nice tip for the waiter or waitress at a restaurant, you are setting the gold standard for them by acting as a good example of how to behave and act as a regular person. Sometimes, you have to set your own gold standard and to have it be a high one in order for other people to follow similarly. If you are able to follow your own rules and ways of conduct, you will make yourself more of a leader and a person who is to be respected by others.

By having a gold standard whether it is in the field of athletics, statistics, science, economics, finance, etc., there are a lot of benefits to holding yourself or holding others to a very high level of standards. If everyone in society just did the bare minimum, then not much would change or advance. By being responsible, using sound judgment, working hard, and striving to be the best we can be, we become better people and we develop a strong code of conduct. You don’t need to have a gold standard in order to be a good person or a good worker but it certainly helps in setting some key boundaries, rules, and ethics that should be followed in order to get the most out of yourself and out of others.

Those who strive to be the best are rewarded with reaping the benefits of the gold standard in many different fields. If you’re able to hold yourself physically, mentally, and emotionally to different ideals, you’ll reach the high standard that is set for yourself. The gold standard is not for everyone because not everyone can reach that highest level of human conduct and action. However, the purpose of the gold standard is for people who have the means and the drive to be the best can do just that if they set their minds and bodies to that illustrious goal.

To put it simply, if there were no gold standard or no standards at all to hold yourself or others to, society would not be as civilized and humans would not have as advanced as much as we have to the present day. While the gold standard is for the best of the best, there are other standards that we accept and implement whether it is an employees’ code of conduct from any regular company or the Constitution of the United States. Regulations, rules, and codes of conduct can be difficult to follow and observe at all times but they are necessary in order to keep society functioning well.

Those people who disregard these norms of behavior are often castigated and are excluded from being the best of the best. If you lie, cheat, or steal, you won’t meet any normal standard let alone the gold standard. The gold standard is aiming for all of us to achieve the best of human nature and to do so in different fields of work and in life. While we may not successfully get to the gold standard in finance, medicine or in athletics, we always have the chance to reach the gold standard in our personal behavior and conduct.

 

 

The Limits of Perception

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“Do you see what I see?”

“Perception” is an interesting word when you think deeply about it. No, I’m not just talking about your two eyes, and the vision that allows you to perceive the world visually. In other words, we can only perceive the experiences that we have or had in the past, the people we met, the places we visited and lived in, and the choices that we make or made.

Human beings are mortal which means we have limited time on this Earth to see and experience all that life has to offer. For some people, this is a very frightening and gloomy notion. However, others would see this fact as a way to get the most out of life and expand their perception of the world as much as possible.

A limited “perception” of life and the world has consequences when you think about it. If you don’t have the ability to put yourself into someone else’s shoes or to imagine or experience life as they do, then your ability to emphasize with them would be diminished. Yes, you can have sympathy for their plights or jubilation for their successes but you wouldn’t be able to connect with them on a deeper level.

A consistent problem in human nature is our lack of ability to put ourselves in someone else’s shoes and see life as they do. When we are unable to break down barriers between social classes, races, religions, and gender, disagreements and hostilities between these groups is likely to continue. From my perspective and my past travels, the similarities of humans around the world drastically outweigh the differences. That doesn’t mean that these differences are bad or that they should be eliminated. I happen to believe that cultural and social differences are part of what makes humanity unique and should not be demonized.

This leaves the question that my blog readers would wonder to themselves hopefully after reading this entry: How do I expand my perception of life and the world around me? Now, when I ask this question, I do not mean for you to go out to the nearest pharmacy and get yourself some contacts or a pair of prescription glasses.

What I mean and what I believe is that we humans have limited time on Earth and we can’t live forever to experience everything and to meet everybody around the world. However, there are ways to expand this perception by traveling the world, reading books, and meeting different kinds of people. These three concepts are not crazy ideas but rather novel concepts to create greater empathy in yourself and for others along with a more profound view of humanity as a whole.

Traveling has always had the highest return on investment for me and the experiences I have had have helped me view the world in a different way. I know that it’s not feasible for everyone to travel but if you can’t make a huge jump to another country, try to travel to different places and cities within your own country. Learning about the local culture and customs, enjoying the local cuisine, and indulging in the history and background of the society are important for any seasoned traveler.

You will start to view the world in shades of grey rather than pure black and white. You would also learn that cultures and societies are complex and that it takes a lot of time to immerse yourself in its deeper reaches. Most of all, you are communicating in a different language which is fascinating and complex in its own right. Above all else, you are seeing the commonalities and similarities that exist between your family and their family, your town and their town, and your country and their country.

Meeting new people from different backgrounds and places ties into traveling as well but it really makes your perception of the world grow. If you stay in the same town where you grow up and never leave, chances are that you’ll have a limited perception of people and life itself. Talking to different people, hearing their stories, cooking with them, and sharing a meal or drink has many benefits. You may be able to build a friendship that lasts for years even if you don’t speak the same language or come from the same culture.

By hearing their story and listening to them, you expand your own perception of the world and the people who inhabit it. You can get beyond the stereotypes and the clichés and really get into deeper social connections with people, especially in this interconnected world that we all live in.

Lastly, reading books is an integral park for learning about the world and facilitating a deeper perception. As individuals, we cannot experience everything or know everything there is to know. However, by reading about the stories of others who have come before you and who had lived, and died, you will gain greater knowledge and wisdom. Regardless of whether the book is fiction or non-fiction, you’re reading someone’s life story or reading about a subject that spans a part of human history.

Book by book, you are enlightening yourself by learning about the experiences and perceptions of others. By learning about the men and women who have come before you and who have lived exemplary and distinguished lives, you can take lessons from their existence and apply those lessons to your own life. If you can’t travel or meet different kinds of people, reading books by those authors who have and whom shared those unique experiences with their readers is the next best thing.

We all have one live to life, and you can only see what’s right in front of your eyes. Make sure that you continue to give yourself the opportunities and chances to indulge in the knowledge and wisdom that can be gained by expanding your perception of the world and its inhabitants. Travel, read books, and meet different people for as long as you may live. Only then will you gain true enlightenment and wisdom.