Diminishing Returns
Notes
Claim
Diminishing returns is the idea that the added value from the next unit is getting smaller and smaller the more we have, and might even become negative. This is opposite to the idea of Repeated actions yield exponentially increasing returns over time, where the added value of each additional unit grows.
Explanation
Diminishing returns are the proof that some things are Progress and change follow non-linear trajectories with thresholds, for example our creative output is 100% correlated with the amount of time we invest in it. Investing more time doesn't lead to more outputs, or at least not the expected amount.
Why it matters
This also supports Minimalism. Because of the diminishing returns, it is often more useful to dedicate our attention and resources to the very basic things that gives high return, and less on accumulating more and more stuff that eventually leads to negative return. Meaning that not only the added value of every new item is decreasing, but also the gap between a potentially different item that we could invest in rises Every choice costs the alternatives you gave up
If we really want to optimize aspects of our lives, we need to see in which areas we have reached a level of diminishing returns that makes additional investments not worthwhile.
Examples
Let's look at money. When you have absolutely no money, getting 100$ is the world to you, it changes your life. But when you are super rich, getting another 100$ is practically worthless. Similarly, this can also be the case for the number of friends you have, the number of workers you employ.
Imagine food. When you're hungry, a pizza surprise is amazing, but by the 30th slice I think you would prefer to avoid eating more, and any additional slice would actually make you sick. This is similar to the Most benefits come from a small proportion of inputs, that most of the benefits comes from a small subset of what you do/have. The more we add, the less value we get One activity displaces another when pursued excessively
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Overview
🔼Topic:: Tradeoffs and Consequences ◀Origin:: 🔗Link::