Thread: Marginal Utility

Originally Posted by goober

What your Heritage Foundation economist was pointing out is that the marginal utility of money decreases, as income rises.
His example was that the $100 bill, which to a person of modest means represents a sizable chunk of utility, represents the utility of a match to the millionaire in the story.
That is not an example of the marginal utility of money holding constant, that is an example of the diminished utility of a $100 bill(which is money).

It all depends, did he get satisfaction lighting that cigar with the $100 bill? If so the utility did not diminish. I guess you don't understand what satisfaction is.

Originally Posted by dnsmith

It all depends, did he get satisfaction lighting that cigar with the $100 bill? If so the utility did not diminish. I guess you don't understand what satisfaction is.

Ahh, there's the problem, you don't understand what utility means. It seems that the meaning of basic terms, like utility or surplus, used to discuss these issues escapes your grasp.
There is no point where utility vanishes, but it diminishes as the count increases.
So while the person in question no doubt derived some satisfaction from lighting his cigar with $100 bill, it was relatively less that the satisfaction he derived from spending $100 when his income was far less.

Originally Posted by goober

Ahh, there's the problem, you don't understand what utility means.

Au contraire! Satisfaction is as much utility as any other type of utility. In fact, as I got more financially stable and attained more satisfaction from my status the more utility my money gave me.

It seems that the meaning of basic terms, like utility or surplus, used to discuss these issues escapes your grasp.

Only in your narrow minded ignorance.

There is no point where utility vanishes, but it diminishes as the count increases.

It diminishes if you let it diminishes.

So while the person in question no doubt derived some satisfaction from lighting his cigar with $100 bill, it was relatively less that the satisfaction he derived from spending $100 when his income was far less.

That depends entirely on the individual. That is what escapes your small mind, the individualism of each person of whom you speak. So far every example you have tried to give about diminishing utility of money actually was the diminishing utility of some good or service.

Originally Posted by dnsmith

Au contraire! Satisfaction is as much utility as any other type of utility. In fact, as I got more financially stable and attained more satisfaction from my status the more utility my money gave me. Only in your narrow minded ignorance.It diminishes if you let it diminishes.That depends entirely on the individual. That is what escapes your small mind, the individualism of each person of whom you speak. So far every example you have tried to give about diminishing utility of money actually was the diminishing utility of some good or service.

OK, clearly you don't understand the subject of marginal utility. Bye now

Originally Posted by dnsmith

A very good example of the marginal utility of a good, in this case real estate.

I don't think you can easily decouple the utility of the estate from the utility of the money necessary to buy it.

Originally Posted by goober

OK, clearly you don't understand the subject of marginal utility. Bye now

When actually I know a lot more about it than you do or will ever know. In addition, I don't need some fancy "expert" to do my thinking.

Originally Posted by Disillusioned_1

I don't think you can easily decouple the utility of the estate from the utility of the money necessary to buy it.

Of course money goods and services are inextricably tied together. Attaining goods and/or services are the purpose of money which in and of itself is useless if not spent to buy those goods and services. That is part of Goobers problem as he evaluates money as money, and every time he tries to give an example he invariably finds some good/or service to discuss. He also does not understand the intrinsic value of satisfaction, or the variability of the issue as it relates to different individuals. Just as he is stuck on an accounting gimmick as it applies to trying to understand the true meaning of deficits/surpluses, he is stuck on how he feels about what money's value really is. He has used some cock and bull example of buying a Chevrolet or a Cadillac in the past, suggesting the only value differentiation between the two is the relative transportation each gives, rather than the feelings of comfort, dependability or just plain pride of ownership. He is arrogant as to his opinions being so much expressed wisdom he refuses to go outside of the box and think for himself. In some things, especially as it pertains to ones ability to actually do calculations correctly, an individuals opinion can be equal to or greater than some expert in the ether.

But down to the specifics relative to real estate, it also involves the use to which one chooses to apply to that purchase. It particularly boils down to the satisfaction one gets from the ownership. It is the absolute utility of satisfaction of ownership or the intrinsic value of that real estate as an investment used to accrue profit.

Originally Posted by dnsmith

Of course goods and services are inextricably tied together. Attaining goods and/or services are the purpose of money which in and of itself is useless if not spent to buy those goods and services. That is part of Goobers problem as he evaluates money as money, and every time he tries to give an example he invariably finds some good/or service to discuss. He also does not understand the intrinsic value of satisfaction, or the variability of the issue as it relates to different individuals. Just as he is stuck on an accounting gimmick as it applies to trying to understand the true meaning of deficits/surpluses, he is stuck on how he feels about what money's value really is. He has used some cock and bull example of buying a Chevrolet or a Cadillac in the past, suggesting the only value differentiation between the two is the relative transportation each gives, rather than the feelings of comfort, dependability or just plain pride of ownership. He is arrogant as to his opinions being so much expressed wisdom he refuses to go outside of the box and think for himself. In some things, especially as it pertains to ones ability to actually do calculations correctly, an individuals opinion can be equal to or greater than some expert in the ether.

But down to the specifics relative to real estate, it also involves the use to which one chooses to apply to that purchase. It particularly boils down to the satisfaction one gets from the ownership. It is the absolute utility of satisfaction of ownership or the intrinsic value of that real estate as an investment used to accrue profit.

Why can't you find a single reference to a respected source that backs you up?

Originally Posted by goober

Why can't you find a single reference to a respected source that backs you up?

Why would I need any more than the myriad sources that Maha or I have put up? It is obvious you have not read for understanding anything but your own narrow little references. In addition, if you are not smart enough to figure it out on your own you likely will never understand what the pundits say any way. Why not look back at the first statement furnished to you earlier before you complain there is no support for satisfaction as utility.

Originally Posted by dnsmith

Why would I need any more than the myriad sources that Maha or I have put up? It is obvious you have not read for understanding anything but your own narrow little references. In addition, if you are not smart enough to figure it out on your own you likely will never understand what the pundits say any way. Why not look back at the first statement furnished to you earlier before you complain there is no support for satisfaction as utility.

LOL, the sources you and Maha have put up show that the marginal utility of money declines with increased income.
If you understood the subject, you would have known that.

Originally Posted by dnsmith

Of course money goods and services are inextricably tied together. Attaining goods and/or services are the purpose of money which in and of itself is useless if not spent to buy those goods and services. That is part of Goobers problem as he evaluates money as money, and every time he tries to give an example he invariably finds some good/or service to discuss. He also does not understand the intrinsic value of satisfaction, or the variability of the issue as it relates to different individuals. Just as he is stuck on an accounting gimmick as it applies to trying to understand the true meaning of deficits/surpluses, he is stuck on how he feels about what money's value really is. He has used some cock and bull example of buying a Chevrolet or a Cadillac in the past, suggesting the only value differentiation between the two is the relative transportation each gives, rather than the feelings of comfort, dependability or just plain pride of ownership. He is arrogant as to his opinions being so much expressed wisdom he refuses to go outside of the box and think for himself. In some things, especially as it pertains to ones ability to actually do calculations correctly, an individuals opinion can be equal to or greater than some expert in the ether.

But down to the specifics relative to real estate, it also involves the use to which one chooses to apply to that purchase. It particularly boils down to the satisfaction one gets from the ownership. It is the absolute utility of satisfaction of ownership or the intrinsic value of that real estate as an investment used to accrue profit.

But whether you're in it for profit or satisfaction of ownership, nobody buys or sells an estate for $50,321,362.15 as the raw price. To me, that means that there is some decrease in the utility of money, at least in regards to real estate and business transactions. Obviously if you're talking about bank deposits, there is zero decrease in the marginal utility of money you expect every penny you deposit to be available for withdrawal. Even at the low end, nobody sells a shitty car for $321.21. They sell it for $325 or $320. You can argue that its the car that suffers the decrease in utility, but you also admit that money is inextricably linked in the buying of goods and services which suggests you understand that money has a role in that decrease of utility.

Originally Posted by goober

LOL, the sources you and Maha have put up show that the marginal utility of money declines with increased income.
If you understood the subject, you would have known that.

I guess giving you web sources is a waste of time because you don't understand what you read. All the way back to Marshallian economics the theory still looms large, the marginal utility of money TENDS to remain constant. It can diminish if inflation reduces its value and one loses the ability to acquire as many goods or services after inflation than before.

Originally Posted by Disillusioned_1

But whether you're in it for profit or satisfaction of ownership, nobody buys or sells an estate for $50,321,362.15 as the raw price. To me, that means that there is some decrease in the utility of money, at least in regards to real estate and business transactions.

To me it simply shows that for expensive property round numbers tend to be easier to understand. It has nothing to do with diminishing utility.

Obviously if you're talking about bank deposits, there is zero decrease in the marginal utility of money you expect every penny you deposit to be available for withdrawal. Even at the low end, nobody sells a shitty car for $321.21. They sell it for $325 or $320. You can argue that its the car that suffers the decrease in utility, but you also admit that money is inextricably linked in the buying of goods and services which suggests you understand that money has a role in that decrease of utility.

As I said earlier to Goober, the only marginal utility of money dimishment is based on inflation which makes the money able to buy less with the same amount. But when you get right down to it, satisfaction as utility dominates the rich man's intentions whereas the less wealthy person gets utility by using acquisitions to survive on. As the quantity of money increases the amount of utility defined as satisfaction goes up relative to the utility defined as need. The need does not go down, but it becomes less important in the mind of the user of money than does the satisfaction gained by the expenditure or investment.

"The principles that man's desire for wealth is limitless is fully consistent with the law of diminishing marginal utility." GEORGE REISMAN