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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
by 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 agoYes, 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 agoI 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)