Personal experience demonstrates the validity of the economic law of diminishing marginal utility which states that usefulness or pleasure diminishes with the consumption of each additional unit. While the first few brand-name shirts are prized and reserved for special occasions like a promotion or designation as a guest speaker in a conference at the beach, the 21st shirt of the same brand cannot elicit the same rapture.
What is true for branded shirts is true as well for neckties, fountain pens, cars, umbrellas, smart phones, gadgets, and foreign trips. A surfeit even invites ennui.
Stretching the law of marginal utility further, it can be imagined that as a person’s disposable income increases beyond basic and even ordinary caprices like a weekend at the beach, the addition of each new good becomes increasingly joyless, even depressing. The problem, especially for material things, becomes a matter of storage and then coming up with a rotation program to be able to use the entire inventory piling up.
A corollary theory to marginal utility can be called the incidence of the useless purchase, which states that somebody with excess disposable income will spend it on an item he will not use immediately, or ever. The useless purchase is the result of impulse buying which is almost always followed by buyer’s remorse. (I already have this color.)
When asked about an idle personal gym or stair master, the unrepentant fitness buff says that the rowing machine is even better than cross-country skiing, which doesn’t address the issue at all. When the ordered equipment arrives, it is quickly assembled, and then tried a few times. (is it time to ski?) No later than the third month of occasional use, the theory of marginal utility sets in. The equipment provides less and less value and eventually zero enjoyment. It ends up as a repository of wet towels being dried.
The theory of the useless purchase is in full flower when acquisition starts to outpace usage. Objects are bought faster than they can be used. Neckties from past shopping sprees and trips accumulate with their price tags pristine and still attached. The tie specifically suffers from fashion obsolescence as there are fewer occasions for ties, even among CEOs. It supposedly cuts oxygen going to the brain.
Books pile up as unread furniture. This bibliophile’s curse has taken a digital turn so that the mad acquisitions are hidden from physical view, appearing only as thumbnail pictures of covers on a gadget, which even then can be consigned to the cloud.
The solution to the problem of diminishing enjoyment is abstinence.
The compulsive book buyer puts his acquisitive appetite under control by forcing himself to read first all 240 books he has already bought and still in their plastic casings (Yes, including that Edith Grossman translation of Don Quixote) before buying yet another book. And the digital equivalent is even simpler to manage with just-in-time purchases.
Will holding on to disposable income and converting this to savings or investment in mutual funds rather than to consumption give the rational man true happiness? We have been told too often (as we tell others too) that we should enjoy our wealth and not be the richest persons in the cemetery. “Carpe diem” was the motto of the charismatic teacher played by Robin Williams in Dead Poets Society. Seize the day, max the credit card, get that pair of sneakers.
If the theory of marginal utility dictates that purchasing the same category of consumption can dull the appetite and reduce actual enjoyment, we just need to change gears and go for other pleasures. Note, we do not use the word “vice.” Millennials, after all, are supposed to consume experiences (selfie in front of hanging coffins) rather than goods. Isn’t that why they take photos of food for posting? Experiences are for sharing. That’s why posting rhymes with boasting.
The marginal utility effect is a nice problem to have. Boredom can come in different forms. Isn’t it better to be bored in a five-star hotel suite than in a crowded bus? Boredom from a predictably comfortable existence should be embraced, just like a boring basketball game when your team is leading by 20 points.
Anyway, excitement is not always all that desirable. Cheap thrills can eat up disposable income in one day… or night.
A. R. Samson is chair and CEO of Touch DDB.
