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The law of diminishing returns

The law of diminishing returns is a classic law of economics. The economics definition might be a little confusing so I’ll do my best in explaining the basic idea of it. Essentially it means that as you continue to add more of the same thing, the added benefit becomes less and less.

Here are a few real life examples which should help to clear up the meaning:

1. Imagine a student who is studying to take an easy test. Let’s assume that he can learn everything in about 10 hours of study. The first 10 hours of studying will have a much greater impact on his test score than his second 10 hours of studying. After a certain point, any extra studying will be a waste of time because he already knows the material.

2. Imagine now that you are going to clean your messy bedroom. The first hour of cleaning will make the most difference, the second hour should make less difference than the first hour, and eventually, if you continue cleaning your room, your extra time spent cleaning won’t make much difference at all because your room will already be clean.

3. How much money someone has works the same way. The first million dollars you earn makes a much bigger difference on the quality of your life than the second million dollars. After a certain point, extra money doesn’t make any difference in your lifestyle at all. In terms of lifestyle, there is not much difference between 30 billion and 60 billion dollars.

Let me know if you have any questions.

Andy

39 Responses to “The law of diminishing returns”

  1. Amelia Says:

    hey,Andy and Andrew : how are you? today i am really luckily that i found your website by chance. I am loving it. you won’t believe i have already downloaded 20 lessons. For nearly 4 hours i haven’t leave my seat. I already feel you are my friends coz your sounds so familiar.:)
    Thank you a lot for your efforts and your passion for helping people. I am admiringing ing your guys.

    The phrases are all very useful. thanks
    for today’s learning :
    the law of diminishing returns; i think i got the meaning of it thanks for your clear explanation. but i want to know when you use the phrase does it always followed by is the subject to ….?

  2. Daniel Says:

    Hey guys,

    good topic today!!!

    i already studied the law of diminishing returns.
    Here goes an example: imagine you need only two itens to live – food and clothes. As much as you have one item, let’s supose, food, each extra unit that you obtain doens’t make much difference in your basic utility. So you have an incentive to buy clothes. You need to have a balanced basic utility: an optimized quantity of food and clothes. But this law works only in a theoric world: as much as you have as much as you want.

    Bye

  3. Andriy Says:

    Thank you for a great explanation guys!

    I just was wandering, doesn’t the law of diminishing returns actually means, than you don’t have to do better even if you could. Does it? Because we all know that in most cases, if you want to do very good things, you have to give it some extra time. Don’t you think?

    P.S. Could you be so kind to correct my grammar mistakes? Thank you.

  4. jamila Says:

    Hello !
    I’m not agree with this law … really I think we began by doing the most important part of a work or a basic part … then in order to do better we keep on doing not the same thing but all this stuff you have to do when you want to make your work better and better it’s not the same …. This law are likely to encourage laziness …. I hope I understood it’s rule

  5. 232xiao Says:

    Hi ABs,

    Thank you for your e-mail first. Sorry that I did not reply you in time, I was in a quite special time back to China, so that I could not get access to internet routinely, even because of that, I lost a great amount of my investment.
    But anyway, I am now back, and I can life on.

    This “law” you wrote here, in my view, IS an important thought which many people actually need to learn nowadays, because some people just tend to forget or even have never thought of their ultimate goals in life.

    Another way, sure not classic, to remind us our ultimate goals in life is an imagination once per day, that we are leaving the world next day or week. Thus, it becomes clear, what is the most important things for us.

  6. safa Says:

    well i think this law is not a go in all of aspects in our life…..some times…u have to do more effort and keep working to reach to what u want whereas some other cases the overworking may be is usless and not benefitial

  7. Sarkar Says:

    I happened to be looking for some site where I would find casual conversation. That’s yours, which is based on practical english, real life, and I couldn’t expect more. I love it.

    My gratitude to you all team members who have been working for this site. Of course, special thanks to Andy and Andrew.

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  9. mohamed Says:

    Hi,guys
    You are really great as usual.Thanks so much
    Greetings from Egypt.

  10. Bek Says:

    The law of diminishing returns is common phrase comes up all the time and we already experienced it.I guess these two guys making people have fun when studying.The content you choose is very helpful in some situations.keep moving forward.

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