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Thread: Marginal utility of money

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    Quote Originally Posted by danielpalos View Post
    How much marginal utility does money have for the wealthiest one percent?
    It allows them to do things with it that satisfies the top couple tiers of Maslow's hierarchy if they so desire which would have great utility. If they just let it sit there, not so much.


  2. #182

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    I believe this special pleading definition may explain some aspects of any given rational addiction model.

    - - - Updated - - -

    Quote Originally Posted by smevins View Post
    It allows them to do things with it that satisfies the top couple tiers of Maslow's hierarchy if they so desire which would have great utility. If they just let it sit there, not so much.
    Typically, what have the wealthiest done in the private sector to "out compete" each other when in the same tax bracket?

  3. Default

    Quote Originally Posted by danielpalos View Post
    Typically, what have the wealthiest done in the private sector to "out compete" each other when in the same tax bracket?
    Build the biggest crap or give it away in the grandest way, or some combination of both
    Last edited by smevins; Aug 01 2013 at 06:35 PM.

  4. #184

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    Quote Originally Posted by Iriemon View Post
    Diminishing marginal utility

    The law says, first, that the marginal utility of each homogenous unit decreases as the supply of units increases (and vice versa); second, that the marginal utility of a larger-sized unit is greater than the marginal utility of a smaller-sized unit (and vice versa). The first law denotes the law of diminishing marginal utility, the second law denotes the law of increasing total utility."

    http://en.wikipedia.org/wiki/Marginal_utility

    The law of diminishing returns is about the marginal utility of each homogenous unit.

    You are arguing that is wrong by using non-homogenous units.

    I agree if you change it and use a bogus definition, you can come to a different conclusion.

    You can change the definition of "deficit" and then say there was no surplus under Clinton, or change the definition of orange and say the grass is orange.

    Your not making any logical point. Simply semantics.
    Yet the whole discussion on my part has to do with the fact that as wealth increases the size of the marginal unit under consideration increases, thus marginal utility can increase. I could really give a rats butt what your definition, as again I AM DISCUSSING THE MARGINAL UTILITY OF MONEY, NOT GOODS AND SERVICES AND MONEY IS NOT TREATED THE SAME AS GOODS AND SERVICES. Look at my original OP. Do you see anything there about a law of diminishing utility? Of course not. I knew the paradox of money instead of goods and services would confuse the lessor informed.
    Left wing extremists are as obnoxious and obscene as right wing extremists. Both arrogantly believe theirs is the only opinion which counts. Both are wrong!

    There are none so blind as those who will not see. They are to be pitied who choose to nit pick even those who agree with most of their philosophy.

  5. #185

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    Quote Originally Posted by Liberalis View Post
    I'm tired of going in circles with you and responding to your same failed arguments and irrelevant refutations. The law of marginal utility requires that the units remain constant. Yes, units change--but not when you are measuring the effects of the law of marginal utility. You have ignored this distinction repeatedly, and I have run out of patience.
    Quite frankly your patience does not disturb me at all. My argument is fact as supported by capitalist paradigm economists. If you don't want to accept it as being part of the law of diminishing utility that is ok by me. So long, that is, that you understand that as wealth increases the size of the MARGINAL UNIT OF MONEY INCREASES, thus the marginal utility OF MONEY CAN INCREASE.
    Left wing extremists are as obnoxious and obscene as right wing extremists. Both arrogantly believe theirs is the only opinion which counts. Both are wrong!

    There are none so blind as those who will not see. They are to be pitied who choose to nit pick even those who agree with most of their philosophy.

  6. #186

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    Those of you who want to understand marginal utility need to read more. This one piece gives more than one way to look at it.http://bastiat.mises.org/2012/09/aus...ginal-ulitity/ More to follow tomorrow.
    Left wing extremists are as obnoxious and obscene as right wing extremists. Both arrogantly believe theirs is the only opinion which counts. Both are wrong!

    There are none so blind as those who will not see. They are to be pitied who choose to nit pick even those who agree with most of their philosophy.

  7. #187

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    Quote Originally Posted by dnsmith View Post
    Those of you who want to understand marginal utility need to read more. This one piece gives more than one way to look at it.http://bastiat.mises.org/2012/09/aus...ginal-ulitity/ More to follow tomorrow.
    I agree if you change the definition of marginal utility you can say that it doesn't diminish.
    I agree if you change the definition of deficit you can say Clinton had a deficit in FY2000.
    I agree if you change the definition of orange you can say grass is orange.

    Impressive.
    Last edited by Iriemon; Aug 02 2013 at 06:18 AM.

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  9. #188

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    Quote Originally Posted by dnsmith View Post
    Those of you who want to understand marginal utility need to read more. This one piece gives more than one way to look at it.http://bastiat.mises.org/2012/09/aus...ginal-ulitity/ More to follow tomorrow.
    I agree that with special pleading, anything can work, within that "vacuum".

    Why is concentration of wealth more marginally useful than full employment of resources in the market for human capital?

  10. #189

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    http://mises.org/humanaction/chap7sec1.asp
    Chapter VII Action Within the World
    1. The Law of Marginal Utility
    "Quantity and quality are categories of the external world. Only indirectly do they acquire importance and meaning for action. Because every thing can only produce a limited effect, some things are consider scarce and treated as means. Because the effects which things are able to produce are different, acting man distinguishes various classes of things. Because means of the same quantity and quality are apt always to produce the same quantity of an effect of the same quality, action does not differentiate between concrete definite quantities of homogeneous means. But this does not imply that it attaches the same value to the various portions of a supply of homogeneous means. Each portion is valued separately. To each portion its own rank in the scale of value is assigned. But these orders of rank can be ad libitum interchanged among the various portions of the same magnitude. [p. 120]
    "The praxeological notion of utility (subjective use?-value in the terminology of the earlier Austrian economists) must be sharply distinguished from the technological notion of utility (objective use?-value in the terminology of the same economists). "

    "The law of marginal utility and decreasing marginal value is independent of Gossen's law of the saturation of wants (first law of Gossen). In treating marginal utility we deal neither with sensuous enjoyment nor with saturation and satiety. We do not transcend the sphere of praxeological reasoning in establishing the following definition: We call that employment of a unit of a homogeneous supply which a man makes if his supply is n units, but would not make if, other things being equal, his supply were only n-1 units, the least urgent employment or the marginal employment, and the utility derived from it marginal utility. In order to attain this knowledge we do not need any physiological or psychological experience, knowledge, or reasoning. It follows necessarily from our assumptions that people act (choose) and that in the first case acting man has n units of a homogeneous supply and in the second case n-1 units. Under these conditions no other result is thinkable. Our statement is formal and aprioristic and does not depend on any experience."

    "If we were to believe that marginal utility is about things and their objective use?-value, we would be forced to assume that marginal utility can as well increase as decrease with an increase in the quantity of units available. It can happen that the employment of a certain minimum quantity?--n units?--of a good a can provide a satisfaction which is deemed more valuable than the services expected from one unit of a good b."

    "A man whose savings amount to $100 may not be willing to carry out some work for a remuneration of $200. But if his savings were $2,000 and he were extremely anxious to acquire an indivisible good which cannot be bought for less than $2,100, he would be ready to perform this work for $100. All this is in perfect agreement with the rightly formulated law of marginal utility according to which value depends on the utility of the services expected. There is no question of any such thing as a law of increasing marginal utility."

    "How do we define homogeneity? Very easily......two objects are homogenous if both can serve the same end. (interchangeable in use for satisfaction.) Take the case of a man with 2 sweaters, of the same color and the same physical properties of keeping a person warm. On the one hand they are homogenuous in that they are interchangeable in their use to produce satisfaction of warmth. But if the individual chooses 1 over the other it demonstrates his preference, thus two homogenuous units may in fact have different marginal utility based on his preference.
    "Block's analysis (Block 1980, PP. 424-425) Suggested that goods are homogeneous before action, but during action (of selection) goods become heterogeneous. " The problem with this approach, if there is no way to group things into classes (different kinds of supply) and not treat all the billions of billions of goods as homogenous. Since before action all goods are not part of the action, then cars can be homogenous with peanuts. {I personally disagree with that assertion but recognize the value of the comment in that it further defines homogenuity)
    Neoclassicists presume that people are indifferent to all goods, which basically leads us to a striking conclusion, which cannot be accepted, that people are indiferent to different needs. This leads them to another conclusion which is counter praxeological thus disregarding the concept of preference of selection not being related to satiation. Classic Liberals, including Austrian school economist disagree totally with their theory.



    My own opinion which I formulated while doing graduate work for my MBA with a minor in Economics is more simple to understand that the expressed theories of most economists. Effectively I do not believe that money cannot be applied to the Law of Diminishing Utility in the same manner as goods and services, even if (and I don't agree it does) the marginal unit is constant in size or value. The reason being, unlike a steak which has a marginal utility based on the perception of satisfaction by the individual eating it, the second steak is not as satisfying. But given the satisfaction of a marginal unit of money, and recognizing that the second unit can be as satisfying as the first since it can be used to acquire something with equal or greater satisfaction as was acquired by the first marginal unit, as does the third unit and the fourth unit and so on. In addition to which even as the individual becomes wealthy his perception of satisfaction would necessarily require ever increasing sizes of marginal units.
    Economists of different schools, such as Classic Liberal, Austrian, Socialist et al, all view marginal utility in a different manner. The Classic Liberal and the Austrian paradigm economists either do not accept that money can even be considered subject to the law of diminishing utility or that with wealth the size of the marginal unit increases in relative proportion to increases of wealth. Socialist paradigm economists insist that the marginal unit remain constant in size and that it applies to money just like goods and services and that the marginal utility diminishes as wealth increases.
    The reasons for the socialist paradigm economist are mostly predisposed such that their concept of diminishing marginal utility is a good reason to propose that an even greater progressive income tax can be reasonably extracted from the highest earners.

    What it boils down to is, economists of different schools disagree as to what the marginal utility means based on the units used.
    Left wing extremists are as obnoxious and obscene as right wing extremists. Both arrogantly believe theirs is the only opinion which counts. Both are wrong!

    There are none so blind as those who will not see. They are to be pitied who choose to nit pick even those who agree with most of their philosophy.

  11. #190

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    Quote Originally Posted by Iriemon View Post
    I agree if you change the definition of marginal utility you can say that it doesn't diminish.
    I agree if you change the definition of deficit you can say Clinton had a deficit in FY2000.
    I agree if you change the definition of orange you can say grass is orange.

    Impressive.
    Yet, I for one do not change the definition of anything whether it is about marginal utility, deficits and surpluses or the definition of a color. I do recognize that not all methodology arriving at proper conclusions are the same. And unlike some people I don't live and think in a sealed concrete box. I use my ability to think outside the box to check what I learn in the box.
    Left wing extremists are as obnoxious and obscene as right wing extremists. Both arrogantly believe theirs is the only opinion which counts. Both are wrong!

    There are none so blind as those who will not see. They are to be pitied who choose to nit pick even those who agree with most of their philosophy.

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