I'm simply stating that money does not have fewer uses as one gets more of it. Usually the person's scope changes to include new uses that were not previously possible. The important thing to note is that utility is being used in mixed definition here. Strictly speaking it's definition is happiness or satisfaction. The part about having less use doesn't necessarily match this.
Heck, this exact fact is the very reason why Bill Gates engages in philanthropy. He realizes that other people need the money more than he does.
"Money also has diminishing marginal utility, so as you accumulate more of it, at some point it has less use."
The additional money does not have less use. It's just not going to add as much to quality of life or dictate "life and death". There are still many uses for it, so of which may not be possible with lower amounts.
Yes, $10 buys the same Mcdonald's lunch regardless of how much money one has, but two people, one with $0 and one with $1bn in net worth will be excited about that lunch to very different degrees.
This thread in response to this, to point out that the use of money is not the same as the marginal utility.
"Money also has diminishing marginal utility, so as you accumulate more of it, at some point it has less use."
The additional money does not have less use. It's just not going to add as much to quality of life. There are still many uses for it.
You seem to be interpreting utility in terms of the quantity of things the money can be used for or in terms of the societal benefit that can be obtained from the money, it is not entirely clear.
This thread is in response to this, to point out that the use of money is not the same as the marginal utility. Its mot like having a bunch of money makes it less useful or have fewer uses.
Yes, but as I said above, in this case having use is defined relative to promoting your own satisfaction as a consumer.
I think you are trying to tease apart "utility" vs "use", but to have utility is the property of having use. It's a question of what the utility/use is in reference to, and for economists, that utility is in reference to preference satisfaction by the consumers.
I think, the idea that getting rich does not create a lot of additional joy from diminishing utility is one the best fairy tales ever invented.
It's diminishing marginal utility. Every single comment I've gotten disputing this either misinterprets the word "marginal" or the word "utility", I encourage all of y'all to take an economics course.
Edit: granted, there are a lot of observable situations that do indeed show diminishing marginal utility, but I think the concept is often too much taken at face value when actual data or analysis is scarce and the marginal utility might behave in a more complex way
That said, the empirical evidence is pretty overwhelming in favor of diminishing marginal utility of money, in addition to the fact that it just makes sense. Actual data on this phenomena is not actual as scarce as you seem to be suggesting.
I personally have found that there were times when the marginal utility of my additional wealth was growing as I could suddenly do things I could not do before... (while it other times it almost felt like 0)
In other words: if the diminishing utility axiom were true we could start redistributing now, but one would predict the money owners would be against it.
It's proof by contradiction - everyone knows money is political power.
If something has diminishing *marginal* utility if doesn't follow that a third party has a right to seize it(property rights, different/tangential topic). Therefore this:
> It's proof by contradiction - everyone knows money is political power.
Is an inconsequential conclusion.
Billionaires give away far less of their money compared to the average person:
https://www.msn.com/en-us/money/other/ceo-says-billionaires-...
>Based on these figures, MarketWatch reported Bezos donated just .5 percent of his net worth last year - a quarter of the 2 percent the average American donates each year.
Also, why should money be concentrated in the hands of the ultra-wealthy, does their wealth make them more qualified to decide how it's spent compared to society/government?
https://www.theguardian.com/commentisfree/2020/apr/12/americ...
>First off, the amounts involved are tiny relative to the fortunes behind them. Bezos’s $100m, for example, amounts to about 11 days of his income.
>Well-publicized philanthropy also conveniently distracts attention from how several of these billionaires are endangering their workers and, by extension, the public.
>And why should we believe that Gates or any other billionaire’s “boldness” necessarily reflects society’s values and needs? Oligarchies aren’t the same as democracies.
"Based on these figures, MarketWatch reported Bezos donated just .5 percent of his net worth last year - a quarter of the 2 percent the average American donates each year."
I'm not looking at percent of net worth. Most of the time that is not the "money" that we are talking about here and would not be subject to the utility and use being discussed. For example, the vast majority of Bezos' worth is tied up stock. Also, not every billionaire is the same. Some may not be giving much, but there are many who have pledged to give away the majority of their fortunes.
"Also, why should money be concentrated in the hands of the wealthy, does that make them more qualified to decide how it's spent compared to society/government?"
I've made no claims or mention on this topic.
"Well-publicized philanthropy also conveniently distracts attention from how several of these billionaires are endangering their workers and, by extension, the public."
Again, not part of my discussion. However, I will say that I find this to be untrue when you see articles coming out discussing this very thing (ie your quote).
"Oligarchies aren’t the same as democracies."
Again, off topic. I agree that they are different. I even agree with the implied part about living in an oligarchy. However, that oligarchy in my opinion is more based on if someone is in the ruling class with special privileges and the power to ignore laws when they want (politicians, judges, cops, DAs, etc) than being a billionaire (although money can help influence).
It could be subject to the same utility if we taxed it, that's what I was getting at. Wealthy people aren't using money that society could put to great use.
>Also, not every billionaire is the same. Some may not be giving much, but there are many who have pledged to give away the majority of their fortunes.
Why settle for "some" when we could tax all of them?
"It could be subject to the same utility if we taxed it, that's what I was getting at."
"Wealthy people aren't using money that society could put to great use."
Then you could say that the average person's 401k isn't being used either. But investments are a use of money that do contribute to society in providing capital to businesses and individuals. Gains on those investments are also taxable.
There are plenty of things we could do, but that's not really what we are discussing here.
But the average person has much more marginal utility for their amount of wealth. Going by the average 401k balances here (https://www.investopedia.com/articles/personal-finance/01061...), the marginal utility of dollars $38,401, $160,001, etc is much greater than even millions of dollars at Bezos and Gates level wealth. What else am I missing about utility in this context?
>Gains on those investments are also taxable.
At a much lower rate than income, further cementing the advantages of the ultra-wealthy.
Not while it's invested and locked away in a 401k, according to your comment about it not being used (presumably consumption based):
"Wealthy people aren't using money that society could put to great use." Emphasis mine
"What else am I missing about utility in this context?"
This thread was in response to someone claiming money has less use when you have more of it, which isn't really what marginal utility is about.
"At a much lower rate than income, further cementing the advantages of the ultra-wealthy."
Ok... we aren't really discussing rewriting the tax code.
This is why Bill Gates is still a monster to me. The amount of damage he did through Microsoft over the decades (both corrupting culture so everyone is tied to using MS Windows and the people MSFT economically wiped out) cannot be measured. His after-the-fact giving does not make up for it.
Thats true assuming the same scope, like living expenses. It gets a little more nuanced if the person changes the activities in scope. If you're giving billions away in a philanthropic organization that you run (ie Gates), then you've found new utility for that money. So in some ways it has more possible uses, but less pressure to actually use it. But I think your implied point of limited choices for people with lower income/capital is still valid.