Dissecting diminishing returns
Today we’re going to explore the action-packed world of economics.
No, wait. Don’t run away. Economics (“the dismal science”) can be fun. Let me re-phrase that: Economics (“the semi-interesting science”) is not entirely boring.
The issue we’re exploring today is called The Law of Diminishing Returns, or to put it in the form of a question: Is Starbucks coffee really that much better than Folgers?
The Law of Diminishing Returns is particularly relevant in modern, pretentious America, in which you can now pay twice, five times, or 10 times too much for practically everything. Take, for instance:
A chocolate bar – You can go to the supermarket and buy a large bar of Hershey’s chocolate for around a buck. But you can also buy a bar of imported Lindt Swiss chocolate for $2. Since Lindt chocolate is no longer snooty enough for many Americans, you can also go to a specialty retailer and buy a bar of “artisanal chocolate” for $5.
As a student of economics (“the insouciant science”) I wanted to explore the complexities of the situation. Plus, I was hungry. So I tried the Hershey’s bar; it was a little waxy, but what the hell, it was chocolate. Then I tried the Lindt bar and asked myself: Is it really twice as good? I don’t know, but it was definitely better. Then I tried the $5 “artisanal bar.” Oh, yeah.
But was it five times better than Hershey’s? No. Maybe it tasted five times better than say, herring paste. But it didn’t taste five times better than Hershey’s, and it certainly didn’t taste 2½ times better than Lindt, because they’re all chocolate. How bad can chocolate ever be?
This then, is my interpretation of the Law of Diminishing Returns. When you pay five times as much for something, you rarely get five times the quality.
Five times? For some products, that’s nothing. Take, for instance:
Wine – I just bought a perky and assertive little California red for $16, and that was for the entire box. Yes, this was a box o’ wine, the equivalent of four regular bottles, or about $4 per bottle.
Then I was at a party where someone had brought a bottle of L’Ecole No. 41 Apogee, a bold and saucy Walla Walla red for $44. In the interests of economic research I tried a little taste or two, after which I have a dim recollection of someone prying my fingers from the neck of the bottle. Was it good? Is a marmot Protestant? Does a weasel flit in the woods? You’re darn tootin’ it was good.
But then, for comparison, I went home and push-buttoned me a nice glass of box wine. Was it actually 11 times lousier than the Apogee? Of course not. It was red, it was made out of grapes, it was wine and it contained alcohol. Who’s to complain?
This law applies to nonconsumables as well, especially:
Cars – We all know that luxury cars cost a lot more money because … well, because they are luxurious. But do you get what you pay for?
Once again, in the interests of economics (“the vivacious science”), I put this to the test. I have a friend who has a Lexus, widely considered one of the finest of luxury cars. She let me drive her Lexus around for a few days, and let me tell you, that is one quality vehicle. I felt as if I were floating through town on my own personal cloud, listening to Scarlatti on the concert-quality stereo and looking down condescendingly on people driving mere Toyotas (the Lexus’ cheaper sister brand).
But then, when I got home, I looked up how much one of those little beauties costs. A Lexus LS 430 luxury sedan lists for $56,525, or almost four times as much as a Toyota Corolla. Was all that “luxury” worth it? Oh, heavens yes.
However, one cannot escape the Law of Diminishing Returns. When we look at it in the cold harsh light of economics (“the erotically charged science”), we see that a Lexus will not take us to work four times more efficiently than a Toyota; it will not get us to Aunt Marge’s for Thanksgiving four times faster; and a Scarlatti minuet will not be four times prettier than in a Toyota.
Which leaves us with our opening question: Is Starbucks coffee really that much better than Folgers? Even for a trained economist like myself, that’s a tough question. Personally, I suggest you compromise and try Yuban.