I've been meaning to write this post for a long while now, and I've actually had a couple longish discussions with friends about this concept of diminishing returns. It is my absolute favorite concept I learned from high school economics, and I find it to be the most practical to daily life. Sure, supply and demand gets all the fanfare and has a two line graph showing the point of intersection where suppliers and demand-ers should meet for sheer nirvana and such, but it doesn't really do much for people who aren't in the business of supplying or demanding. Well, a whole bunch of us are in the business of demanding lots of things, but it doesn't correlate as nicely or as quickly as those textbook graphs. Examples: the cost of the original PS3 or the current iPhone--it takes a while for supply & demand to take over to find the magic $299 and $199 price points, respectively.
But diminishing returns, now that you see everyday. You see it in my blog (I posted a lot, got fed up with it, and stopped, and now I'm doing it again). You see it in reality TV (Survivor comes out, then Idol, but after the 25th season of Idol, you just stop caring). Wikipedia-ly stated, 'In economics, diminishing returns (also called diminishing marginal returns) refers to how the marginal production of a factor of production starts to progressively decrease as the factor is increased.' Simply stated, after a certain point, the more you put in, the less you get out.
Ex. At a fast food joint, the more labor you hire, the more burgers you can push out. Let's say you originally had 4 employees working who churn out 80 burgers an hr which is 20/person/hr. You hire another person, and now you can do 100/hr (given that you have the demand for it). You hire another person, but now you can only get an extra 15/hr.
What happened? Well, there's not enough grill space anymore. Eventually if you keep hiring more workers, you get to the point where people just get in the way, and you actually lose production for each additional unit of labor. To maximize efficiency, you'd want to add inputs until you get to the point of diminishing [marginal] returns, that is the point where the next unit would start to have less production value (the 15 burgers/hr person). To maximize total production, you'd want to add inputs until the total production starts to turn south (where the next person hired would contribute nothing or take away from the total production).
Of course there's a whole bunch of factors in determining how much inputs you should use. But it's all very academic and boring, and doesn't have a popular iPhone app for it, so who cares?
I promise, it's really useful in figuring out why you and people around you do things! Maybe..
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My idea of diminishing returns doesn't concern inputs and outputs. It deals with the net gain/pleasure per additional unit of stuff.
Mama told me this about my favorite dish when I was a kid: 'Eat one day, you desire for more. Eat two days straight, you grow tired'*. Turns out to be very true. I'm so glad I live in Houston where there's such a diverse and vibrant culture of obesity which means there are diverse and vibrant restaurants. The point of diminishing returns (PoDR) depends on how much you like the food, but everyone has a point. Incidentally, my PoDR for Tex-Mex is significantly higher than for Viet food probably due to Mama's psycho-babble.
And now for a visual:
Ex. The smartphone craze:
Blue phase: first couple hours after getting the phone activated and recovery from sticker shock. 'What's the big deal with a touch screen phone? Texting while driving is even harder now that I have to peck at those virtual keys! And it can't even make calls without a special cover on it!'
Green phase: 'OMG, there's an app for that? So friggin awesome!'
Yellow phase: 'o...m...g..., there's...an...app...for...that...haven't slept in days...eyes are fried by super AMOLED or whatever screen...'
Orange phase: 'cell phone bill is over $300, but my life had been incomplete before the advent of fruit ninja and his comrade apps which mimic bodily functions.'
Red phase: 'I have terminal brain cancer and crippling arthritis of the thumbs. If I had to pick one to be cured, it would have to be the arthritis so I can live out my last moments on this earth yelling sweet nothings to my smartphone because of its poor call quality.'
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Okay, seriously now. I did not think there was a point of diminishing returns for money, but I have sadly reached that point. Let me explain before you break out the world's tiniest violin. My hourly rate working in a small town a couple hours outside of Houston was outrageous. And the work was pretty chill, and there was ample opportunity for extra hours (not time and a half, but with extra pay on top of a ridiculous rate). And so I worked 23 12-hr shifts straight. Not once, but twice.
I figured it was just money sitting on the table, and I might as well pick it up while I still have the stamina to work all those hours. But when I paid off the debt that had any interest, the desire to work all those hours faded. Nothing had changed much except I had no reason to make money anymore. That extra dollar had diminished in value to me, especially since the gov't took a hefty chunk before I even saw it.
If I had a family or kids or a car or house, then things would have been different. I would have remained in the green phase of the DR curve since I had a reason to work. So when that job ended and I was offered a relief job, I decided to take a few months off since I was well into the yellow phase and rapidly approaching the orange.
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It was at this point that I embarked on the longish green phase of the PS3/Netflix DR curve. I finished the 80ish episodes of the Battlestar Galactica series (a really great drama, and not just for nerds/sci fi folks) and started on the first season of the X-Files before I again reached the PoDR. This was also after I spent 129 hours to get the Platinum Trophy in Final Fantasy XIII (totally worth it!).
So after a couple of months of not working much (I put in a couple of shifts here and there), my work DR curve has finally been reset, and I am ready to start working regularly again. And I'm glad to say I haven't suffered much vision loss or thumb muscle hypertrophy from the PS3/Netflix addiction.
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I can't think of anything that doesn't in some way follow my loose interpretation of diminishing returns. Drug addicts who reach a point of tolerance (yellow) consume more and more to get the same high (orange), ultimately resulting in their death (red). But for most things, when a person or thing gets to that yellow or orange phase, they back off until that thing or activity feels good (or tolerable) again. One just has to figure where that point is before they surpass it and have a hard time getting back to the green phase. Or one can find ways to shift the curve by finding reasons to continue an activity, such as making money to pay for kids' tuition.
Even studying for classes which rapidly reaches the PoDR, you can shift the DR curve by thinking about the reasons for your current state of torture. Like the cash you'll make when you graduate, or the lives you'll affect, or that general feeling of satisfaction of accomplishing something really big.
But sometimes, regardless of how good you determine your point(s) of diminishing returns, you just need a break. So take that break. The world and its problems will still be there tomorrow. And you'll be in a better mindset to take on those challenges.
I apologize for the sappy ending. It really isn't like me to be all inspirational and non-sarcastic/satirical.
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*It's much more poetic/sparse in Vietnamese: an mot ngay, them, an hai ngay, chan. Literal: Eat one day, hunger; Eat two days, tired.
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