4 ms·

It's at best a strong hypothesis. There can be situations where utility is constant or even increasing (not necessarily monotone). If I can only afford one shir

It's at best a strong hypothesis. There can be situations where utility is constant or even increasing (not necessarily monotone). If I can only afford one shirt then actually going for a situation where I can own three shirts could make my life a lot simpler, similarly, being able to afford a car could have strong positive effects. I think, the idea that getting rich does not create a lot of additional joy from diminishing utility is one the best fairy tales ever invented.

giantg2 5y ago
I sort of agree, but would say that fairy tale part might be better described as a psychological effect, but still consistent with your questioning it as other than a hard economic fact. What I mean is that the person's psychology may change as they become accustomed to a specific standard of living. For example, if someone grows up driving new BWMs, they might see it as "normal" and not derive as much joy from it as someone who got a new BWM after working for it for years. So it seems that the axiom is specific to an individual and their psyche, which provides provides few beneficial use cases beyond understanding that if people have 'a lot' of money, then money might not be a strong motivator.
whimsicalism 5y ago
> think, the idea that getting rich does not create a lot of additional joy from diminishing utility is one the best fairy tales ever invented. It's diminishing marginal utility. Every single comment I've gotten disputing this either misinterprets the word "marginal" or the word "utility", I encourage all of y'all to take an economics course.
- RandomLensman 5y ago
  Sorry, just skipped the "marginal", but my point stands: the marginal utility does not need to drop. I could enjoy my 10th car just as much as my 9th... or even more (and I have taken some economics courses). Similarly, going from $1B to $2B might more than double my total utility, nothing is stopping that from happing a priori Edit: granted, there are a lot of observable situations that do indeed show diminishing marginal utility, but I think the concept is often too much taken at face value when actual data or analysis is scarce and the marginal utility might behave in a more complex way
  - whimsicalism 5y ago
    Yes, because economics is a social science, none of its axioms are "a priori" in the same sense that they might be in math. That said, the empirical evidence is pretty overwhelming in favor of diminishing marginal utility of money, in addition to the fact that it just makes sense. Actual data on this phenomena is not actual as scarce as you seem to be suggesting.
    - RandomLensman 5y ago
      I am aware of some older studies on marginal utility of money for individuals, but they span quite low income/wealth. I have seen some small data that suggest that at the very least the drop in marginal utility is much weaker than previously thought for high wealth brackets. Do you have some pointers to newer data on UHWIs, for example? I personally have found that there were times when the marginal utility of my additional wealth was growing as I could suddenly do things I could not do before... (while it other times it almost felt like 0)

giantg2 5y ago

I sort of agree, but would say that fairy tale part might be better described as a psychological effect, but still consistent with your questioning it as other than a hard economic fact. What I mean is that the person's psychology may change as they become accustomed to a specific standard of living. For example, if someone grows up driving new BWMs, they might see it as "normal" and not derive as much joy from it as someone who got a new BWM after working for it for years. So it seems that the axiom is specific to an individual and their psyche, which provides provides few beneficial use cases beyond understanding that if people have 'a lot' of money, then money might not be a strong motivator.

whimsicalism 5y ago

> think, the idea that getting rich does not create a lot of additional joy from diminishing utility is one the best fairy tales ever invented. It's diminishing marginal utility. Every single comment I've gotten disputing this either misinterprets the word "marginal" or the word "utility", I encourage all of y'all to take an economics course.

RandomLensman 5y ago
Sorry, just skipped the "marginal", but my point stands: the marginal utility does not need to drop. I could enjoy my 10th car just as much as my 9th... or even more (and I have taken some economics courses). Similarly, going from $1B to $2B might more than double my total utility, nothing is stopping that from happing a priori Edit: granted, there are a lot of observable situations that do indeed show diminishing marginal utility, but I think the concept is often too much taken at face value when actual data or analysis is scarce and the marginal utility might behave in a more complex way
- whimsicalism 5y ago
  Yes, because economics is a social science, none of its axioms are "a priori" in the same sense that they might be in math. That said, the empirical evidence is pretty overwhelming in favor of diminishing marginal utility of money, in addition to the fact that it just makes sense. Actual data on this phenomena is not actual as scarce as you seem to be suggesting.
  - RandomLensman 5y ago
    I am aware of some older studies on marginal utility of money for individuals, but they span quite low income/wealth. I have seen some small data that suggest that at the very least the drop in marginal utility is much weaker than previously thought for high wealth brackets. Do you have some pointers to newer data on UHWIs, for example? I personally have found that there were times when the marginal utility of my additional wealth was growing as I could suddenly do things I could not do before... (while it other times it almost felt like 0)