Thread: Marginal Utility

Originally Posted by dnsmith

Your same old argument stated in the same old way reflects ignorance of the subject you THINK you understand. I have told you what the facts are relative to the DMU of money and the many economists who theorize it as such. The fact that you refuse to accept individual satisfaction which cannot be judged by anyone but he who experiences it means you are ineducable. Your inability to understand after the many descriptions by top economists while trying to educate you means you are a waste of time.

BTW, with over 17,000 posts and no Rep points, it is obvious most of the rest of the posters believe you are full of it, instead of on top of it. But, but, but, they just don't understand you say? Baloney, it is you who refuses to think clearly who does not understand.

You still haven't found anyone, anywhere who backs up your argument.
All you have done is repeat the same misinterpretation, why do you think you can't find that?
Why do you think that you have been unable to find anyone who states clearly that marginal utility may rise or remain constant with income?
You claim that is the mainstream opinion, held by the vast majority of economists, yet you can't find it anywhere on the internet, does that suggest something to you?
Yet the internet abounds with things like this
Appendix A: The Diminishing Marginal Utility of Money - Mises Media
And please note, that is mises.org, not marxist.org.

Ever wonder why economists call it "The Law of Diminishing Marginal Utility"?

Originally Posted by Blue Doggy

The fact is, charities were overwhelmed during the great depression. This is a historical fact. I cannot believe you were not aware of this fact. You are gonna have to revise history to keep on your present course.

Of course I am aware of it. Yes, charities were overwhelmed by the great depression. So was government revenues. I was not addressing the exceptional, I was addressing the norm. I also was in favor of the CCC and WPA which put people to work to feed their families and we should always TEMPORARILY do things like that during recessions or depressions, which hardly negates my opinion about charity vs government take over of welfare. Psssst, I also agree with SS. After all, I am a democrat. Isn't agreeing with SS part and parcel of being a democrat?

- - - Updated - - -

Originally Posted by goober

You still haven't found anyone, anywhere who backs up your argument.
All you have done is repeat the same misinterpretation, why do you think you can't find that?
Why do you think that you have been unable to find anyone who states clearly that marginal utility may rise or remain constant with income?
You claim that is the mainstream opinion, held by the vast majority of economists, yet you can't find it anywhere on the internet, does that suggest something to you?
Yet the internet abounds with things like this
Appendix A: The Diminishing Marginal Utility of Money - Mises Media
And please note, that is mises.org, not marxist.org.

Your same old erroneous claims are not worth discussing. BTW, your link does not prove your opinion.

Originally Posted by dnsmith

...
Your same old erroneous claims are not worth discussing. BTW, your link does not prove your opinion.

If you were capable of understanding it, it would.....
THE FINANCIAL PHILOSOPHER: The 'Diminishing Marginal Utility' of Wealth

Originally Posted by goober

If you were capable of understanding it, it would.....
THE FINANCIAL PHILOSOPHER: The 'Diminishing Marginal Utility' of Wealth

A great definition of the DMU of goods and services. That economist talks about consuming, not the satisfaction of gaining more wealth. You lose again Goober. Your example once again proves you can't think for yourself and that you do not understand the meaning of what even your own citations say.

"While individual consumers may not have an economic measure of satisfaction, Economists, as you would imagine, do have one for consumers: It is called utility. In economics, total utility is essentially the "sum of satisfaction or benefit that an individual gains from consuming a given amount of goods or services..." There is, of course, a certain level of consumption at which we become "satisfied" and our desire to consume more begins to diminish. Accordingly, the price you are willing to pay for more of the product or service also diminishes. This summarizes the Law of Diminishing Marginal Utility."

When you tie the additional wealth to consumption you continue to fail to understand the simple satisfaction gained from adding additional units of wealth which further means that the DMU of money can go up, go down or remain constant. Especially when one tries to measure that satisfaction of another. I guess you will never learn since you so consistently describe just the opposite of what you assert is fact.

Originally Posted by dnsmith

A great definition of the DMU of goods and services. That economist talks about consuming, not the satisfaction of gaining more wealth. You lose again Goober. Your example once again proves you can't think for yourself and that you do not understand the meaning of what even your own citations say.

"While individual consumers may not have an economic measure of satisfaction, Economists, as you would imagine, do have one for consumers: It is called utility. In economics, total utility is essentially the "sum of satisfaction or benefit that an individual gains from consuming a given amount of goods or services..." There is, of course, a certain level of consumption at which we become "satisfied" and our desire to consume more begins to diminish. Accordingly, the price you are willing to pay for more of the product or service also diminishes. This summarizes the Law of Diminishing Marginal Utility."

When you tie the additional wealth to consumption you continue to fail to understand the simple satisfaction gained from adding additional units of wealth which further means that the DMU of money can go up, go down or remain constant. Especially when one tries to measure that satisfaction of another. I guess you will never learn since you so consistently describe just the opposite of what you assert is fact.

You should read the link before believing it supports your argument.

So I dug up a philosophy gem from a lesser known philosopher, Jeremy Bentham, dating back nearly 200 years, which illustrates what an economist today might call the diminishing marginal utility of wealth:

So far as depends on wealth, -- of two persons having unequal fortunes, he who has most wealth must by a legislator be regarded as having most happiness.

But the quantity of happiness will not go on increasing in anything near the same proportion as the quantity of wealth...

The effect of wealth in the production of happiness goes on diminishing, as the quantity by which the wealth of one man exceeds that of another goes on increasing: in other words, the quantity of happiness produced by a particle of wealth (each particle being of the same magnitude) will be less and less at every particle; the second will produce less than the first, the third than the second, and so on. ~ Jeremy Bentham (1748 - 1832), 'Pannamonial Fragments', Works, III, p. 228

Originally Posted by goober

You should read the link before believing it supports your argument.

I did read it, and I did understand what they were trying to say. That 200 year old economic opinion is crap. And the description by the person who wrote the article; "While individual consumers may not have an economic measure of satisfaction, Economists, as you would imagine, do have one for consumers: It is called utility. In economics, total utility is essentially the "sum of satisfaction or benefit that an individual gains from consuming a given amount of goods or services..." There is, of course, a certain level of consumption at which we become "satisfied" and our desire to consume more (of that one good or service) begins to diminish. Accordingly, the price you are willing to pay for more of the product or service also diminishes. This summarizes the Law of Diminishing Marginal Utility." is clearly talking about buying consumer items. He doesn't even touch on the subject of satisfaction as sufficient utility on achieving a new unit of money. So your old economist disagrees with the old economist name Marshall. Not an uncommon event. Almost all economists (if not all) who follow the socialist paradigm believe in the DMU of money. NONE of the capitalist paradigm economists do. I guess you didn't understand the part about CONSUMPTION OF GOODS AND SERVICES. So far you have shown little understanding of anything of value in the discussion.

You are still embarrassing yourself by trying to prove a negative. You are simply wrong. And once again, your opinion bites the dust.

Searching, searching, searching, RAWHIDE! Maybe one day you'll get it, but so far you are still back in the dark ages of left wing economics.

Originally Posted by dnsmith

I did read it, and I did understand what they were trying to say. That 200 year old economic opinion is crap. And the description by the person who wrote the article; "While individual consumers may not have an economic measure of satisfaction, Economists, as you would imagine, do have one for consumers: It is called utility. In economics, total utility is essentially the "sum of satisfaction or benefit that an individual gains from consuming a given amount of goods or services..." There is, of course, a certain level of consumption at which we become "satisfied" and our desire to consume more (of that one good or service) begins to diminish. Accordingly, the price you are willing to pay for more of the product or service also diminishes. This summarizes the Law of Diminishing Marginal Utility." is clearly talking about buying consumer items. He doesn't even touch on the subject of satisfaction as sufficient utility on achieving a new unit of money. So your old economist disagrees with the old economist name Marshall. Not an uncommon event. Almost all economists (if not all) who follow the socialist paradigm believe in the DMU of money. NONE of the capitalist paradigm economists do. I guess you didn't understand the part about CONSUMPTION OF GOODS AND SERVICES. So far you have shown little understanding of anything of value in the discussion.

You are still embarrassing yourself by trying to prove a negative. You are simply wrong. And once again, your opinion bites the dust.

Searching, searching, searching, RAWHIDE! Maybe one day you'll get it, but so far you are still back in the dark ages of left wing economics.

It's not a 200 year old economist, it's a modern day economist referring to a statement from a philosopher from 200 years ago, which describes what today is called the law of diminishing marginal utility .

Why don't you link to one of those "capitalist paradigm economists" that your so fond of, to where one says "the marginal utility of money may rise or fall or remain constant as income increases"
It should be easy, since it's the mainstream opinion of every economist except a few leftist nutters.....either that or you're delusional, that could the answer right there

Oh look another explanation of Marginal Utility

Law of diminishing marginal utility

Originally Posted by goober

It's not a 200 year old economist, it's a modern day economist referring to a statement from a philosopher from 200 years ago, which describes what today is called the law of diminishing marginal utility .

Why don't you link to one of those "capitalist paradigm economists" that your so fond of, to where one says "the marginal utility of money may rise or fall or remain constant as income increases"
It should be easy, since it's the mainstream opinion of every economist except a few leftist nutters.....either that or you're delusional, that could the answer right there

Oh look another explanation of Marginal Utility

Law of diminishing marginal utility

I HAVE linked you to several, in addition everyone of yours so far supports my opinion. Even your last link does a great job of explaining the DMU of goods and services. And the modern interpretation of the economist from 200 years ago does the same thing. It suports the theory of DMU of goods and services.

Every example you have given supports my contention that the satisfaction of the individual determines if the MU of money goes up, goes down or stays the same - which is what Marshall said 100 years ago. It must make you feel really inadequate when you can't prove your point with your own support citations, but rather you tend to support my point. You need to step up and give it your best shot, not that you haven't already, but here's hoping.

Originally Posted by dnsmith

I HAVE linked you to several, in addition everyone of yours so far supports my opinion. Even your last link does a great job of explaining the DMU of goods and services. And the modern interpretation of the economist from 200 years ago does the same thing. It suports the theory of DMU of goods and services.

Every example you have given supports my contention that the satisfaction of the individual determines if the MU of money goes up, goes down or stays the same - which is what Marshall said 100 years ago. It must make you feel really inadequate when you can't prove your point with your own support citations, but rather you tend to support my point. You need to step up and give it your best shot, not that you haven't already, but here's hoping.

All you have done is demonstrate that either you don't have the reading comprehension to understand the links, or the integrity to admit you are wrong, or maybe both.

You still haven't linked to anything that supports your theory that the vast majority of economists of the "capitalist paradigm" believe that the marginal utility of money may rise or remain constant as income rises.

Do you get that?

You haven't been able to find a single example of what you claim to be the consensus opinion of the majority, anywhere on the internet.
And it's pathetic that you go on pretending that you have.

Originally Posted by goober

You haven't been able to find a single example of what you claim to be the consensus opinion of the majority, anywhere on the internet.
And it's pathetic that you go on pretending that you have.

Both the example of the $100 bill and the 5 sacks of grain are examples of individual satisfaction reflecting utility. If you weren't so dense you would admit it AGAIN as you did so in the last couple of days.

Here is the acknowledged Reisman's example showed no diminishment.

Originally Posted by goober

Yes, Reisman's example of a millionaire lighting a cigar with $100 bill, told you that he rejects the idea that the utility of money diminishes with increased income.

That is a fact and yet most of the time you get it wrong.

But to most people it's an example of diminishing marginal utility. Showing how little he values a $100 bill.

Only to those who can't read with understanding.

And Boehm-Bawerk, with his example of the frontiersman, and the five sacks of grain, convinced you that the frontiersman valued feeding a parrot as highly as he valued his own survival.

You almost got that one, but not quite. At the time he acquired the 5th sack of grain he got satisfaction (utility) from feeding parrots. There was never any attempt to suggest he had more satisfaction than he did achieved survival requirements. But the way it was explained by Boehm-Bawerk, his satisfaction at any one time could be as much with each sack of grain, but only that frontiersman could tell you as he is the only arbiter of his own satisfaction. One cannot make that determination for another.

But to most people it's an example of diminishing marginal utility, as they see he values his survival more than anything, and that feeding a parrot is what he values least.

Only if they can't read with understanding.

And neither actually said "marginal utility may rise with income".

That is implied when ever the individual makes the determination of the level of satisfaction. You keep trying, but you aren't smart enough to read anyone's mind to determine the level of satisfaction.[quote]

One of the books I periodically check out of the library is Mises’ Human Action, the edition that is published in four volumes. Volume four has a handy glossary of terms that Mises uses and how he defines them. It is always important to clarify the meaning of the words we use, particularly with the habit of leftist-Progressive to redefine words on the fly without clearly stating that they are doing so.

Here are some of the interesting words that Mises felt necessary to include in the glossary (vol. 4) of Human Action:

Judgment of value. The outcome of mental acts of an individual, which cannot be observed but which express his wants, tastes, desires, feelings, choices or preferences which incite or impel him to act in a certain manner at a given time, situation and environment in an attempt to substitute conditions he prefers for those he considers less satisfactory. A judgment of value is personal and subjective and thus not open to proof or disproof. It can only be identified by an action from which it is inferred. Page 954

Marginal theory of value. The theory that the value assigned to any good is the importance attached to its use in removing some felt uneasiness and that the value of any unit of a supply of identical goods is the value assigned to the least important (or marginal) use for which the contemplated number of available units expected to be used. This is so because a judgment value always refers solely to the supply with which a concrete choice is concerned, for it is only the use of this specific (marginal) supply that one must decide to acquire or forego. Since each additional unit of an identical good will be allocated to a lesser valued use than was previously possible, the value attached to each additional (marginal) unit will be lower than that assigned to previously held units. Conversely, with each decrease in the number of unit held, there will be an increase in the value of the least important (marginal) use to which the decreased available supply can be applied. The marginal theory of value is the subjective theory of value which is basic to all the theories of the Austrian school of Economics (q.v.). page 962-963

Marginal utility. The least important use to which a unit of a contemplated supply of identical goods can be put. It is this least important or marginal use which is weighed or considered when one chooses to increase or decrease his supply by one unit, since this is the use (or value) which is to be obtained or renounced. Page 963

Subjective theory of value. The theory, held by the Austrian economists and by the Anglo-Saxon followers of the English economists, W. Stanley Jevons (1835-82) and the American economist, John Bates Clark (1847-1938), that the value of economic goods is in the minds of individual men and therefore is neither constant nor inherent in the goods themselves; that values of the same goods vary, as the judgments of the individuals making the valuations vary, from person to person and from time to time for the same person. Page 1003

Subjective use-value. The importance attached to an object or service due to the belief, judgment, knowledge or expectation that its use can produce a desired effect. If it is based on a belief, judgment, or expectation, it may or may not be true. Likewise, a thing with the power to produce a desired effect may not have subjective use-value for a person who is not aware of this fact. Page 1003

Subjective-value theory. The value theory of the modern economists (the followers of Carl Menger, 1840-1921, W. Stanley Jevons, 1835-82, and Leon Walras, 1834-1910) which holds that the relative value of goods and services, in the sense that values determine human action, are to be found in the minds of acting men at the moment of their decisions to act or not to act and not in the physical characteristics or the costs of production of such goods and services. Value is thus said to be subjective rather than objective. Page 1004

Subjectivist economics. Economics based on the theory that the value of goods is not inherent in the goods themselves but is in the minds of acting men; that economic value is a matter of individual judgment which may vary from person to person and for the same person from time to time. Page 1004

Value (i.e., Subjective economic value as contrasted with objective use-value, q.v.). The importance that acting man attaches to ultimate ends. Means (factors of production, q.v.) acquire value as man ascribes to them a usefulness in the facilitating the attainment of an ultimate end. Value is not intrinsic; it is not in things. It is within the human mind; it reflects the way in which man reacts emotionally to the conditions of his environment value is reflected in human conduct. It is not what a man or groups of men say about value that counts, but how they act. Value always relative, subjective and human, never absolute, objective or divine. Page 1012

Goober keeps claiming that Mises believed in the idea that “money” diminishes in value in some kind of objective sense, yet everything I have read, everything dnsmith has posted and every link Goober has provided clearly shows that “value” is subjective and determined by the individual in that moment of time. He has also claimed that Reisman accepts the delusional non-theory of the diminishing value of wealth, yet if that is the case why did Reisman attack directly this silly idea when it was presented by Galbraith in his The Affluent Society?

Galbraith's Neo-Feudalism
By George Reisman
[This article is copyright © 2006, by George Reisman. It originally appeared in Human Events in February of 1961 under the title “Galbraith’s Modern Brand of Feudalism” and was soon thereafter reprinted as a pamphlet under its present title.]

Material progress and individual liberty have once again been made the targets of a crude, sniper attack. In his book, The Affluent Society, John Kenneth Galbraith, Harvard social commentator, has indicated that he views with grave displeasure the “sense of urgency" which is attached to “the craving for more elegant automobiles, more exotic food, more erotic clothing, more elaborate entertainment—indeed for the entire modern range of sensuous, edifying, and lethal desires [sic].” (p. 140.) He has proclaimed that there are things of greater importance, such as more public schools, public parks, public roads, and anything else which “public authority” may deem to be in “relative need.” (pp. 311f.) And he has let it be known that the liberal should cease being “aco-conspirator with the conservative in reducing taxes." (p. 314.)
Were it not for the fact that Mr. Galbraith and his followers will exercise considerable power and influence in the new [Kennedy] Administration, there would be no purpose in discussing the ideas of this man. For as a thinker, Mr. Galbraith is not overly distinguished. His procedure is to combine an immense moral pretentiousness with a rather limited understanding of the teachings of the economists. And though he depicts himself as a daring innovator writing in defiance of an overwhelmingly hostile intellectual environment, his practical position is in essence no different from that of the typical leftist club-woman; nor has it been for quite some time. However, the recent Democratic victory at the polls means that the attempt will be made to implement policies based on the theories of Mr. Galbraith; and, therefore, his ideas bear closer examination.
The thesis of The Affluent Society is a variant of the Marxian dialectic. Our social morals, economic science and political institutions are, in Galbraith’s eyes, the products of an age of scarcity. When men had to contend with cold and hunger, when they had to devote all of their energies to securing their bare, physical survival, production was of paramount importance. It was natural, therefore, that productivity and industriousness should be regarded as virtues, while anything which reduced the supply of goods in the hands of private individuals, such as taxes, should be considered an evil. Thus, Galbraith explains, the businessman and business efficiency were held in high esteem, while the government was viewed with suspicion and forced to bear the burden of proof for the need of every tax dollar; every transfer of resources from private individuals to the government required a specific, affirmative act of the legislature.
Now, however, the underlying economic reality has changed, leaving behind an outmoded political and ideological superstructure which Galbraith calls “the conventional wisdom." For, in America, at least, we have reached an age in which "affluence is rendering the old ideas obsolete . . . ." (p. 143.) In the future, it will be college professors and government officials, not businessmen, to whom the public will grant prestige. (pp 184ff., pp. 194f.) And what is required fiscally is “a system of taxation which automatically makes a pro rata share of increasing income available to public authority for public purposes. The task of public authority, like that of private individuals, will be to distribute this increase in accordance with relative need. Schools and roads will then no longer be at a disadvantage as compared with automobiles and television sets in having to prove absolute justification." (pp. 311f.)
What is Galbraith saying? Stripped of the veneer of pseudo-scientific disinterestedness, he is blatantly arguing for the institution of a modern brand of Prussian feudalism! It is possible that he himself is unaware of this. For he imagines that somewhere, off in the stratosphere as it were, there are private individuals, “public authority," “increasing income," and “relative need." In his eyes, it is a question of mere technical expediency whether “increasing income" is to accrue to private individuals or to “public authority"; in either case, it will be distributed in accordance with “relative need." Affluence now dictates that a pro rata share of “increasing income" accrue to “public authority."
Thus, Galbraith is not for one moment bothered by such mundane questions as to whom does the "increasing income" belong, and whose “relative need" is to determine its distribution? There is simply "increasing income” and “relative need.” The fact that private individuals have produced the goods which constitute the “increasing income" is not considered a valid reason for them to determine its disposal. As was the case with the feudal lords of the pre-capitalist era, “public authority" is to have an unquestioned claim to a regular share of the fruits of others' industry; it will distribute the products of others in accordance with what it, and not they, deems to be in “relative need." And, just as in old Prussia or Czarist Russia, the servants of public authority—the government officials and their intellectual flunkies in the tax supported schools and universities—will have prestige, while the businessman, who supports them, if not considered vulgar, will be regarded as unimportant.
In Galbraith's words: “To the extent that problems of military defense, foreign policy, agricultural administration, public works, education, and social welfare are central to our thoughts, so the generals, foreign service officers, administrators, teachers, and other professional public servants are the popular heroes." (p. 184.)
The chain of reasoning by which Galbraith proceeds from the existence of affluence to advocacy of an irresponsible “public authority" having arbitrary power to spend a pro rata share of the increasing income of the individual is somewhat involved. He begins by citing the law of diminishing marginal utility, according to which the importance an individual attaches to the possession of any given quantity of means of provision diminishes as the total quantity of means of provision at his disposal increases. Thus, according to the law of diminishing marginal utility, a man attaches less importance to the possession of a gallon of water if he has 1000 gallons than he would if he had but ten gallons. Likewise, an individual attaches less importance to $100 if his wealth is $10,000 than he would if his wealth were but $5,000.
Galbraith, in defiance of the most explicit testimony on the part of the leading theorists of marginal utility (see the works of Menger, Böhm-Bawerk, and, Wieser), would have his readers believe that economics as a science has tried to hide the fact that the marginal utility of wealth in general as well as that that of particular goods diminishes. (Chap. X.) And after overcoming the straw man of an incorrect version of the marginal utility theory, and showing that it must apply to wealth in general as well as to particular goods, he draws two totally unwarranted, conclusions:
(1) He infers from the law of diminishing marginal utility, as applied to wealth in general, that the acquisition of wealth becomes progressively less important as the amount of wealth increases. Here he makes an enormous equivocation between the importance of a concrete amount of wealth as the total amount of wealth increases and the importance of acquiring wealth as its total amount increases. For while the importance of the former diminishes with the increase in the amount of wealth, the importance of the latter does not. The very purpose of acquiring wealth and the source of the importance of so doing consist precisely in the reduction of the marginal utility of wealth. The achievement of a progressively lower marginal utility of wealth is one of the main goals of every rational individual. For the ability to achieve an ever lower marginal utility of wealth is identical with the ability to make an ever greater and more complete provision for the maintenance and enhancement of one’s life and wellbeing. It was the desire to be able to reduce the importance attached to bearskins, animal bones, and caves which brought man out of the depths of savagery; and it was the desire to be able to reduce the importance attached to rags, breadcrusts, and primitive hovels which brought man to modern civilization.
Yes, it is true, bearskins and rags no less than the “more erotic clothing" of modern times afford protection against the cold; it is true, animal bones and breadcrusts no less than the “more exotic food" of our day provide nourishment; it is true, caves and hovels no less than the luxurious American homes with air conditioning and swimming pools offer shelter from the elements. And it is also true that if such a catastrophe should ever occur and people be forced to choose, they would attach greater importance to the means of bare, physical survival than to the qualitative differences which distinguish the products of modern industry from those of primitive toil. But does this mean that man should have stayed in the cave, or have stopped upon reaching the hovel ? And does it mean that he should rest content with what he has today? Are life and productive achievement to give way to a passive stupor, merely because one has a full belly and is no longer at the mercy of wind, rain, and cold?
(2) Galbraith's second inference is that the reduced marginal utility of wealth is an argument for the enlargement of the role of the government in satisfying the wants of consumers. This conclusion in no way follows. For not only are the services of the government fully as much subject to diminishing marginal utility as everything else, a point which he seems to overlook, but they are also always of lower marginal utility than the alternative private goods and services. If people must be forced to pay for them under the threat of a jail term for non-payment of taxes, that is the proof. In fact, however, Galbraith's argument is not based on the law of diminishing marginal utility, but only appears to be.”

Read the rest here: "Galbraith's Neo-Feudalism" - George Reisman - Mises Institute

tashi deleks,

M

Originally Posted by dnsmith

Both the example of the $100 bill and the 5 sacks of grain are examples of individual satisfaction reflecting utility. If you weren't so dense you would admit it AGAIN as you did so in the last couple of days.

Really? There aren't very many people who can look at the example of a millionaire lighting a cigar with a $100 bill, and not get that the marginal utility of that $100 bill has diminished quite a bit from the utility of that same bill in the hands of an average worker at a time when that $100 represented a months pay.

That's that whole point, the utility of the marginal unit of money diminishes as income rises.

Marshall considered the marginal utility of money to be constant, because he only looked at examples where income was constant.
And so Marshall treats money differently from goods and services, because he never considers a change in income.

Reisman was a student of Mises, who in 1912, unified money with goods and services as just another good, to which the law of diminishing marginal utility applied, and used the same thinking to explain the changes in the marginal utility of money as income changed.

The cigar story is an example of how much the marginal utility of money had fallen for an individual with a massive income.

Reisman uses it to show how much marginal utility has fallen, and yet the millionaire still desire more income, because (and this is the point of the story) the marginal utility of money diminishes, but never reaches zero, there is always a positive value to the marginal utility of money, even if it is so vanishingly small that a $100 bill has the utility of a match.