Thread: Marginal Utility

Originally Posted by goober

No, you have missed the point completely.
A 1000 calories of fried clams (from say J.T. Farnhams) would have greater utility than 1000 calories of McDonalds French Fries.
This is why people willingly pay more for the fried clams.

Bull crap! I don't like clams, therefore the McDonalds French Fries had a lot more utility for me than the clams. Remember Goober, PERSONAL SATISFACTION IS THE RULE, NOT THE EXCEPTION.

A millionaire might feed his cats sushi grade tuna, since money is of less value to him than to someone of average means.

That is another example which is incorrect. If that millionaire got satisfaction from feeding sushi grade tuna to his cat the money he spent on that tuna did not have a diminishing value to HIM.

If you want a bona fide example of what WOULD be diminishing marginal utility of money it would look something like this: "John earned $1,000,000 last year. His boss gave him a $100 bonus. John cared so little for that new unit of money he didn't bother to go get it. He had no satisfaction in earning that additional $100."

Originally Posted by dnsmith

Bull crap! I don't like clams, therefore the McDonalds French Fries had a lot more utility for me than the clams. Remember Goober, PERSONAL SATISFACTION IS THE RULE, NOT THE EXCEPTION.That is another example which is incorrect. If that millionaire got satisfaction from feeding sushi grade tuna to his cat the money he spent on that tuna did not have a diminishing value to HIM.

If you want a bona fide example of what WOULD be diminishing marginal utility of money it would look something like this: "John earned $1,000,000 last year. His boss gave him a $100 bonus. John cared so little for than new unit of money he didn't bother to go get it. He had no satisfaction in earning that additional $100."

Of course personal satisfaction is how dnsmith and Maha define Marginal Utility.

Economists use a different definition.
Or are you putting Mises down as a leftist nutter?

BTW Goober, your citation of the "rules" by Mises includes this prime example of why high taxation of those who earn a lot of money is counter productive to revenue receipts by the government. This also explains what you believe is Mises belief that the marginal utility of money CAN diminish in the eyes of a rich man. After all, what good are new units of money if the government is only going to confiscate it?

(3) Violating individuals' property rights.[6] Violations of individual property rights (for instance through government taxation, regulations, etc.) will make property owners value present goods increasingly more highly than future goods — a conclusion which follows from the law of diminishing marginal utility.

Violations of individual property rights thus raise peoples' time preference, increasing consumption at the expense of savings and investment, thereby reducing (or even reverting) the pace of capital accumulation. An interventionist-socialist societal order will therefore necessarily lead to impoverishment relative to a free market societal order, in which there are no systematic violations of individuals' property rights.

Originally Posted by dnsmith

BTW Goober, your citation of the "rules" by Mises includes this prime example of why high taxation of those who earn a lot of money is counter productive to revenue receipts by the government. This also explains what you believe is Mises belief that the marginal utility of money CAN diminish in the eyes of a rich man. After all, what good are new units of money if the government is only going to confiscate it?

(3) Violating individuals' property rights.[6] Violations of individual property rights (for instance through government taxation, regulations, etc.) will make property owners value present goods increasingly more highly than future goods — a conclusion which follows from the law of diminishing marginal utility.

Violations of individual property rights thus raise peoples' time preference, increasing consumption at the expense of savings and investment, thereby reducing (or even reverting) the pace of capital accumulation. An interventionist-socialist societal order will therefore necessarily lead to impoverishment relative to a free market societal order, in which there are no systematic violations of individuals' property rights.

He also says that the marginal utility of money can only diminish, that it can not rise or stay the same.
Did you find that part?

Originally Posted by goober

Of course personal satisfaction is how dnsmith and Maha define Marginal Utility.

Not true! We define one specific measurement of utility as the satisfaction of the individual who is acquiring that additional unit of mone.

Economists use a different definition.

No they don't. That is one of your problems of understanding.

Or are you putting Mises down as a leftist nutter?

Not at all, as he recognizes the individuality of utility, something which, swoosh, goes right over your head.

Originally Posted by goober

LOL, you missed this



The Austrian Theory of Money - Murray N. Rothbard - Mises Daily

I really enjoy it when you give citations which consistently prove you wrong. Mises, "Applying the law of diminishing (ordinal) marginal utility of money and bearing in mind that money's "use" is to be held for future exchange, Mises arrived implicitly at a falling demand curve for money in relation to the purchasing power of the currency unit."

Do you understand that he was not referring to marginal utility of money except in relationship of purchasing power?

"While, for purposes of convenience, Mises's analysis may be expressed in the usual supply-and-demand diagram with the purchasing power of the money unit serving as the price of money, relying solely on such a simplified diagram falsifies the theory. For, as Mises pointed out in a brilliant analysis whose lessons have still not been absorbed in the mainstream of economic theory, the purchasing power of the money unit is not simply the inverse of the so-called price level of goods and services. In describing the advantages of money as a general medium of exchange and how such a general medium arose on the market, Mises pointed out that the currency unit serves as unit of account and as a common denominator of all other prices, but that the money commodity itself is still in a state of barter with all other goods and services."

He is saying that the marginal utility of money would diminish if the price of a dozen eggs went up such that it would take more money to buy the next dozen eggs than it did the last dozen of eggs.

Your problem is you try to take out of context what economists are saying and apply it literally and non-contextually. You completely miss the nuances of context.

Originally Posted by dnsmith

I really enjoy it when you give citations which consistently prove you wrong. Mises, "Applying the law of diminishing (ordinal) marginal utility of money and bearing in mind that money's "use" is to be held for future exchange, Mises arrived implicitly at a falling demand curve for money in relation to the purchasing power of the currency unit."

Do you understand that he was not referring to marginal utility of money except in relationship of purchasing power?

"While, for purposes of convenience, Mises's analysis may be expressed in the usual supply-and-demand diagram with the purchasing power of the money unit serving as the price of money, relying solely on such a simplified diagram falsifies the theory. For, as Mises pointed out in a brilliant analysis whose lessons have still not been absorbed in the mainstream of economic theory, the purchasing power of the money unit is not simply the inverse of the so-called price level of goods and services. In describing the advantages of money as a general medium of exchange and how such a general medium arose on the market, Mises pointed out that the currency unit serves as unit of account and as a common denominator of all other prices, but that the money commodity itself is still in a state of barter with all other goods and services."

He is saying that the marginal utility of money would diminish if the price of a dozen eggs went up such that it would take more money to buy the next dozen eggs than it did the last dozen of eggs.

Your problem is you try to take out of context what economists are saying and apply it literally and non-contextually. You completely miss the nuances of context.

I think you better re-read the whole thing.
In the part you quoted, He is talking about purchasing power, not marginal utility, they are two different things.

Suffice it to say, you have been unable to find a single reference to any any economist who in the last 100 years has said that the marginal utility of money is constant.

I have had to supply the references, apparently you did not understand that the idea of the marginal utility of money originated with Austrian school economists, Which tosses your whole theory about diminishing marginal utility of money being a socialist theme into the waste basket.

So when you find someone who states unequivocally that the marginal utility of money can remain constant or rise with income, come back with it, but so far it's just you and Maha....

Originally Posted by goober

I think you better re-read the whole thing.
In the part you quoted, He is talking about purchasing power, not marginal utility, they are two different things.

He is associating the marginal utility of money to purchasing power of that additional unit of money. In that you are correct.

Suffice it to say, you have been unable to find a single reference to any any economist who in the last 100 years has said that the marginal utility of money is constant.

True, but I have sources several who clearly and irrefutably say that the marginal utility of money can go up, go down or remain constant based on the satisfaction derived by he who is acquiring more wealth.

I have had to supply the references, apparently you did not understand that the idea of the marginal utility of money originated with Austrian school economists, Which tosses your whole theory about diminishing marginal utility of money being a socialist theme into the waste basket.

It is not I who does not understand the Austrian school of economists.

So when you find someone who states unequivocally that the marginal utility of money can remain constant or rise with income, come back with it, but so far it's just you and Maha....

I have done so several times as that is the theory espoused by Reisman, Menger, Mises et al. And I have posted quotes to that effect with the links several times.

I have also posted quotes and links to show that the theory that the marginal utility of money diminishes is one of the basic theories of the socialist paradigm. Basis of Socialism Help for Consumer Theory, Economics, Homework Help - Transtutors.com

"The law of diminishing marginal utility provides ground for having socialism in the economy. The rich section of society has less marginal utility for a unit of money, whereas the poor section has more utility for the same amount of money, as poor have relatively less stock of money. If the money or income is redistributed in the favor of poor, the gain to the poor shall be more as compared to the loss to the rich. This process of redistribution will tend to equalize the marginal utility of poor and rich and maximize social welfare."

As I have said before, in relation to economics your are ineducable, and that is because you don't want to learn. IF and I do mean IF you took economics you need to contact your school and get your money back. 

Originally Posted by dnsmith

He is associating the marginal utility of money to purchasing power of that additional unit of money. In that you are correct. True, but I have sources several who clearly and irrefutably say that the marginal utility of money can go up, go down or remain constant based on the satisfaction derived by he who is acquiring more wealth.It is not I who does not understand the Austrian school of economists.I have done so several times as that is the theory espoused by Reisman, Menger, Mises et al. And I have posted quotes to that effect with the links several times.

I have also posted quotes and links to show that the theory that the marginal utility of money diminishes is one of the basic theories of the socialist paradigm. Basis of Socialism Help for Consumer Theory, Economics, Homework Help - Transtutors.com

"The law of diminishing marginal utility provides ground for having socialism in the economy. The rich section of society has less marginal utility for a unit of money, whereas the poor section has more utility for the same amount of money, as poor have relatively less stock of money. If the money or income is redistributed in the favor of poor, the gain to the poor shall be more as compared to the loss to the rich. This process of redistribution will tend to equalize the marginal utility of poor and rich and maximize social welfare."

As I have said before, in relation to economics your are ineducable, and that is because you don't want to learn. IF and I do mean IF you took economics you need to contact your school and get your money back. 

LOL, I'll leave you to your fantasies.

Originally Posted by goober

LOL, I'll leave you to your fantasies.

A sharp tongue does not mean you have a keen mind.

Goober, you remind me of the father in an old Cajun joke.

This man who lived on the Bayou had a son whom he insisted attend college. The boy went off to L.S.U. for a semester and then went home for the break. The father was so proud he invited his entire family to a big celebratory party before which he spent hours cooking seafood jambalaya (a Cajun dish similar to paella). After everyone had enjoyed the feast they gathered for a few snorts of Opelousas corn (corn whiskey common in the area). The father finally proudly stood up and addressed his son to the crowd of anxious extended family. He asked his son, "Aurois, what did you larn in college?"

Aurois spoke up and said, "math Papa."

His Papa said to him, " OK Aurois, spoke me some math."

Aurois hesitated and said, "you don't spoke no math Papa, you use it."

Papa then said, "Aurois, I don't want no sass, SPOKE ME SOME MATH!"

So Aurois said, "Pi R Square."

Papa smacked Aurois up against the side of his head and angrily declared, "Aurois, why you waste my money in college? Everyone knows Pie are round, Cornbread are square."

That is about how you understand economics, just enough to be dangerous.

Originally Posted by dnsmith

A sharp tongue does not mean you have a keen mind.

Goober, you remind me of the father in an old Cajun joke.

This man who lived on the Bayou had a son whom he insisted attend college. The boy went off to L.S.U. for a semester and then went home for the break. The father was so proud he invited his entire family to a big celebratory party before which he spent hours cooking seafood jambalaya (a Cajun dish similar to paella). After everyone had enjoyed the feast they gathered for a few snorts of Opelousas corn (corn whiskey common in the area). The father finally proudly stood up and addressed his son to the crowd of anxious extended family. He asked his son, "Aurois, what did you larn in college?"

Aurois spoke up and said, "math Papa."

His Papa said to him, " OK Aurois, spoke me some math."

Aurois hesitated and said, "you don't spoke no math Papa, you use it."

Papa then said, "Aurois, I don't want no sass, SPOKE ME SOME MATH!"

So Aurois said, "Pi R Square."

Papa smacked Aurois up against the side of his head and angrily declared, "Aurois, why you waste my money in college? Everyone knows Pie are round, Cornbread are square."

That is about how you understand economics, just enough to be dangerous.

If economics were dynamite, you wouldn't have enough to blow your nose........

So much for jokes....

Have you found an economist yet who clearly states that the marginal utility of money may rise, fall or remain constant as income increases?
Because, since you claim that most economists believe that, it should be pretty easy. Wouldn't you think?

Originally Posted by goober

If economics were dynamite, you wouldn't have enough to blow your nose........

So much for jokes....

Have you found an economist yet who clearly states that the marginal utility of money may rise, fall or remain constant as income increases?
Because, since you claim that most economists believe that, it should be pretty easy. Wouldn't you think?

Of course, and I have listed them all. Either you don't read my posts are you are incapable of reading what economists say about marginal utility of money, which is, the utility of money based on the satisfaction each individual gets from an addition unit of money and that it can go up, go down or stay constant. Just because they use economics jargon which you do not understand is not my fault, it is clearly your deficiency. Your marginal utility has diminished. BTW, I no longer worry about what you think, I am convinced you have chosen not to.

Originally Posted by dnsmith

Of course, and I have listed them all. Either you don't read my posts are you are incapable of reading what economists say about marginal utility of money, which is, the utility of money based on the satisfaction each individual gets from an addition unit of money and that it can go up, go down or stay constant. Just because they use economics jargon which you do not understand is not my fault, it is clearly your deficiency. Your marginal utility has diminished. BTW, I no longer worry about what you think, I am convinced you have chosen not to.

Actually you haven't, the closest you came was Hicks, where he stated that Marshall assumed the marginal utility of money was constant, then Hicks went on to explain why Marshall was wrong about that.

And of course you have misinterpreted "the limitless desire for wealth" to mean something that it doesn't mean.

But you haven't found anyone who says the marginal utility of money is constant, at least not in the last 100 years.....