Law of Diminishing Marginal Utility - Philosophical Concept | Alexandria
Law of Diminishing Marginal Utility describes the common experience that as a person increases consumption of a product – while holding consumption of other products constant – there is a decline in the marginal utility that person derives from consuming each additional unit of that product. Often simplified as "the more you have, the less you want it," this principle, however, masks layers of complexity beyond mere satiation. Many assume it speaks only of tangible goods, overlooking its implications for services, experiences, and even abstract concepts.
Early hints of this economic principle appear in the writings of economists long before it was formally codified. Turgot, in his 1767 "Observations on a Paper on the Subject of Indirect Taxation," spoke of diminishing returns in agricultural production, a notion that resonated more broadly with utility. Though not explicitly named, his ideas, formulated during a period of enlightenment and societal upheaval, laid a foundation for understanding how value is perceived and altered with quantity. The era, fraught with revolutionary ideas about individual rights and societal structures, provides a rich backdrop against which to view the nascent development of economic thought.
Over time, the Law of Diminishing Marginal Utility evolved through the contributions of thinkers like Jeremy Bentham, Hermann Heinrich Gossen (who explicitly stated the law), and later Alfred Marshall, who refined its mathematical and practical applications in his "Principles of Economics" (1890). Marshall, in an era of burgeoning industrial capitalism, sought to provide a framework for understanding consumer behavior and market dynamics. Yet, stories abound of exceptions: the collector whose passion for rare artifacts only intensifies with each acquisition, or the art enthusiast whose appreciation deepens with each viewing. Are these departures from the rule, or do they point to deeper, less understood dimensions of human desire and satisfaction that challenge conventional models?
The Law's legacy endures in modern economics, informing everything from pricing strategies to welfare analysis. Contemporary reinterpretations explore its connection to behavioral economics, examining cognitive biases that influence our perceptions of utility. The principle is even subtly echoed in cultural critiques of consumerism, reminding us to question the pursuit of endless accumulation. But, it also raises a deeper question: if utility diminishes, what truly sustains our satisfaction and well-being?