How the law of diminishing marginal utility messes with our happiness

No, no, this is totally not a post I thought about in my Econ 101 class, although I should really study the basics of Economics again; hmm, maybe I will, maybe after I finish writing this piece up, that’s what I’ll do.

Now while I am actually a CS student, at least that’s what my degree would say, or my obituary ( in 2021….you never know ), people who interact with me regularly know that I love throwing financial or economic terms here and there in my conversations cause idk some of the theories in these subjects are really widely applicable in our day to day lives, and also because it makes me sound more intelligent and also partially because I have some research background in finance. Oooooo btw talking about research, check out this cool work at the intersection of AI and economics by Salesforce in this awesome blog post here ( or if you are feeling up to it, then the paper here ).

Anyway, back to the blog post, so let’s first talk about how the blog post came out to be, cause that itself includes a good example of the Law of Diminishing Marginal Utility.

When you reach the point of zero marginal utility, but you are still happy :P

So I got my third research paper accepted a few days back, again in one of the top conferences in the world, and well, honestly, I couldn’t care less about it. I even thought a lot before bothering to tell anyone about it cause it just didn’t seem much of a big deal. Contrast this to my first paper a year back, where I was just jumping around with excitement and couldn’t stop myself from telling the world about it,. I even publicised it on social platforms and stuff ( contrast to now, when I don't even have a social platform anymore :P ). And this got me thinking, why do I not feel the same excitement about this anymore? I mean, it is a big deal; I put a lot of effort into it, I should allow myself to feel happy about it, but instead, I didn’t really feel anything, and I forgot about it in like an hour or something and just moved on to the next thing. This reduction in excitement or gratification from getting more of something, after you have already had some of it before, is what is, in essence, the Law of diminishing marginal utility, and it seriously fucks up your happy moments more than you realise.

Okay, that might not have been the best example, but well it’s my blog, I’ll rant about whatever I want. But yeah, let’s define the stuff formally know, so kids, welcome to Econ 101 with Deku sensei

Straight off from investopedia ( my go to guide for anything related to finance ) the law is defined as :

The law of diminishing marginal utility explains that as a person consumes an item or a product, the satisfaction or utility that they derive from the product wanes as they consume more and more of that product.

In other words, less is more. The more of something you get, the more you get used to it, and the less satisfaction you derive from each additional unit of that thing.

A few technical terms that might get you confused :

1. Utility — Just a fancy name for the amount of satisfaction you get from something
2. Marginal utility — The amount of utility you get from one additional unit of something

A good example of this ( that I again found online ) is this : Have you ever gone to Domino’s and ordered lot’s of pizzas, probably more than you can eat. When you eat the first few slices, you get a lot of satisfaction, when you eat the next few slices, you get a little bit full, and the satisfaction you had from each slice decreases. Then when after a few slices, you get completely full, it doesn’t matter how many more slices you have remaining, you simply don’t want them, but well, you did pay for them, and then they go to waste, and that results in a negative utility.

A nice little example of the law ( and it also hints at why it makes things worse for us due to the anticipation )

Okay you might be saying, I get what the law is, but just like the laws of physics, why do I care, it’s just another law ( hmm, this is interesting, just think about it, how important are the laws of physics, and how little do you care about them, or maybe there are just a too many of laws, for you to care about ?).

Well, you might care about this if you want to remain being capable of feeling happiness ( or you might end up being numb to anything like someone like me, and then well, nothing matters ). Consider this, if the amount of satisfaction you get from each individual unit decreases, but you still want to maintain the amount of happiness you had in the past, what can you mathematically do? You will simply have to ramp up the amount of stuff you consume, and that is the essence 21'st century consumerism.

This should be named the marginal utility meme, ooooo also just consider how marginal utility fuels your obsession with new memes.

Everyone just throws stuff at you online or gives you these small happiness hits by giving you instant gratification, and then the marginal utility of stuff decreases for you, no wonder you feel that nothing interests you anymore, your marginal utility has decreased to the point that the only way you can maintain the previous level of happiness is by consuming more and more of the same stuff, or by finding new products to consume ( which still have high marginal utility ), no wonder we change mobiles, items, or even relationships as frequently as we do, it’s all about the marginal utility you derive from these things. It is what drives the supply-demand dynamics of the financial markets, it’s just everywhere.

So okay, I think I made my point clear why it’s fucking you up. But what to do about it. Well, honestly I have no idea. Personally the fact that I don’t get satisfaction from pumping out research papers anymore, is kind of a first-world problem, which is not something I should really care about ( or write a blog on ), cause the fact remains that the reason you are experiencing low marginal utility, is that you are already at a very high level of utility, you are already killing it. So maybe you can stop complaining about not being able to feel happy about stuff anymore.

Huh, < = > , that’s a pretty cool way of writing it isn’t it ?

But maybe, you can also try to consume less? Like maybe focus on quality over quantity, like maybe I should focus on working super hard on one extra-ordinary piece of research work, instead of producing a lot of not so ground breaking papers. Yeah maybe that should help, I don’t know. One thing that can totally be done is reducing your online content consumption, although that’s really hard in this pandemic ( believe me, I have tried….a lot). Idk, they say you should appreciate the small things in your life, maybe that will also help, maybe try looking more into finding happiness in the everyday occurrences of life, I am not sure, I struggle with the problem a lot myself. Maybe write about it ? I’ll have to see in the coming days if that helps xD

I think that’s all I want to write in this one, it turned out to be more of a rant than a blog post, but well whatever, it’s my blog. As always, to anyone reading this, if you are someone I know, and we haven’t talked for a while, feel free to ping me up, I am dying from boredom, and I am sure we all can do more of conversations with friends in these times ( until, their marginal utility goes down as well, although I hope it doesn’t ). Anyway, until the next one

Stay Safe!