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A life long learner. The aim is to live with experiences not dreams.
9 months ago
Its economics and it states that once you reach a certain level of optimum output, then after that if you keep on adding things to increase the output then your output will not be proportional to the input. After a certain stage it may give marginally negative output also. It is quite simple- your marginal gains will start decreasing after a certain stage.
Suppose you have a field and cultivate potatoes. You use 10 bags of fertilizers and get an output of 500 kilos of potatoes. For every bag of fertilizer you are getting 50 kilos of potatoes. Now you decide to increase the production and therefore increase the bags of fertilizer. Now you use 15 bags of fertilizer and you get 700 kilos of potatoes. You now use 20 bags of fertilizer and get 850 kilos of potatoes. What is happening is for each 5 bags of fertilizer you are increasing you are not getting a proportional increase in potatoes. Your marginal returns are decreasing, though your total returns are increasing.
Now let us look at another scenario. You have worked hard in your job and then you get a promotion with a hefty pay rise. The next morning you wake up feeling like you are on the top of the world. You go to office and get a new cabin and lots of congrats. That evening you go out to buy the latest Apple I phone which you always wanted to buy. Then you go to a restaurant which you have always dreamt of going with your new gorgeous girl friend. It is one of the best and upscale restaurants of your city. You have the best dinner and time of your life.
After a few months, when you wake up in the morning you don’t feel the same elation as you had on the first day. In between you have been to that restaurant a couple of times but now you don’t feel that special about it. The I phone which you had always wanted to buy is now just a mobile to you; you don’t give much attention to the brand.
The law of diminishing marginal returns is working in your life. You girlfriend, whom you absolutely love and wanted to meet daily, now you are meeting her thrice a week.
We expect life to be a linear line in the graph where the 2 axis are reward and effort (it can be changed with happiness in place of reward and experience/expectation in place of effort). But the straight line will invariable curve after some time and give diminishing returns.
An example can be made with money which is so dear to us. if your income increases from 10 thousand dollars to 15 thousand dollars over night, you will be super happy. If you income increases from 100,000 dollars to 115,000 dollars mean you have a slightly better life now. If your income increases from 100,000,000 and 100,015,000, that means you will be just paying a little more tax. The reward seems to be less as you experience more of something.
The same is applicable in your work place productivity. If you work for 8 hours a day then you may be having the optimal productivity. But if you increase it to 10 hour a day or 14 hour a day then your marginal productivity output will decrease. You will come back home both physically and mentally drained.
Same goes with friendship. If you have two friends, you will be close to them. If you have 20 friends and one leaves you then you will be slightly sad. If you have 50 friends and one leave you then you will hardly notice it.
This happens with almost everything, sleeping, eating, drinking, studying, holidays, caffeine and even s3x. They all work in the principle of diminishing marginal returns.
In our life we should therefore keep a realistic expectation otherwise even the marginal rewards and the total rewards will bring unhappiness in our life. It is a fact of life that after every achievement and success there will be a sense of void again.