What's your elasticity of marginal utility of consumption?

[-1=e^ipi]

There is no correct answer, but I'm curious what people on this forum would get.

Suppose I gave you an extra dollar. You would benefit from that extra dollar and could use it to buy stuff to make yourself better off.

Now suppose you were suddenly 25% richer, and then I gave you an extra dollar. As with before, you would benefit from that extra dollar and could use it to buy more stuff, but the benefit might be smaller than before since you are richer.

So now I ask you to compare those two benefits from 1 additional dollar. How many dollars would you need if you were 25% richer to obtain the same change in benefit as you currently do from 1 additional dollar at your current income?

Please be honest with yourself and pick the best value from the poll. You can try to argue what the 'best' value is if you want. If the question is still unclear, let me know.

Edited August 5, 2015 by -1=e^ipi

[Bonam]

When my salary was increased by 20k, my spending increased by maybe about 2k, the rest was just extra money going into savings/investments.

I don't think it's a very linear answer here really. Below a certain threshold, extra income correlates pretty strongly with happiness and health. I believe the last time I read articles on this topic it put that threshold at about $70k in the US (I assume averaging over regional variations for cost of living). Above that, you're getting richer but not really happier or healthier.

How you define benefit in your question is pretty ambiguous though. $1 more in the savings account is $1 more in the savings account in all cases. Is that the same benefit? It is if you are trying to save towards a particular goal that costs x dollars. Or is the same benefit just a matter of increasing your wealth by the same ratio? Then it's $1.25. Or is the same benefit if your lifestyle is modified in such a way as to increase your happiness by the same amount? If so, it's gonna vary a lot from individual to individual.

[-1=e^ipi]

How you define happiness, benefit or utility is totally up to you. Although perhaps I should have said 25% richer throughout your entire lifetime, if that helps you deal with the savings issue.

I believe the last time I read articles on this topic it put that threshold at about $70k in the US (I assume averaging over regional variations for cost of living). Above that, you're getting richer but not really happier or healthier.

To be fair, these higher income people would still generally like an extra dollar. One reason why happiness may not be correlated with income after a certain point is perhaps due to people having to work longer hours and a more strenuous job for a higher income. Perhaps people earning ~$70k/year have the best work-life balance.

If so, it's gonna vary a lot from individual to individual.

Yes, that's the point. I'm curious what the distribution over the people in this forum will be though.

[-1=e^ipi]

You guys are no fun. :/

Just pick a number.

[eyeball]

I want it all.

[cybercoma]

You guys are no fun. :/

Just pick a number.

There's probably 3 people on this forum who even understand what you mean because you're using technical jargon and expecting a general audience to understand you.

[eyeball]

You'd be doing good if even half that number give a crap.

[waldo]

There's probably 3 people on this forum who even understand what you mean because you're using technical jargon and expecting a general audience to understand you.

the thread needs more math... definitely more math! But hey now, what's that thingee about the, "Law of Diminishing Marginal Utility"?

Edited August 8, 2015 by waldo

[-1=e^ipi]

There's probably 3 people on this forum who even understand what you mean because you're using technical jargon and expecting a general audience to understand you.

Other than the title, where is the 'technical jargon'?

It's not a complicated concept. A poor person benefits from $1. A richer person benefits from $1. The poor person probably benefits more from $1 than the rich person. How many more times does the poor person value that $1 if the rich person is only 25% richer than the poor person?

[cybercoma]

You'd be doing good if even half that number give a crap.

I didn't say those 3 give a crap.

[BC_chick]

There's probably 3 people on this forum who even understand what you mean because you're using technical jargon and expecting a general audience to understand you.

The poll has one vote.

[-1=e^ipi]

Well you guys have convinced me that most people are too stupid to answer this question when asked directly.

At least there are a lot of empirical estimates on this.

[Peter F]

No, most people couldn't care less.

[cybercoma]

Well you guys have convinced me that most people are too stupid to answer this question when asked directly.

At least there are a lot of empirical estimates on this.

No; you're too stupid to understand your audience. I understand your question just fine and I think it makes a dumb poll on a public forum for a general audience.

Edited August 17, 2015 by cybercoma

[-1=e^ipi]

No, I understand your question just fine.

I doubt it.

[-1=e^ipi]

No, most people couldn't care less.

They certainty care enough to comment, but not care enough to pick an option from a poll. The latter takes less effort.

[August1991]

There is no correct answer, but I'm curious what people on this forum would get.

Suppose I gave you an extra dollar. You would benefit from that extra dollar and could use it to buy stuff to make yourself better off.

Suppose?

-1=e whatever, send me $1000 and I'll give you an answer.

=======

Clueless, invitation to gaming....