15 points

expand_less expand_more

Lots of things have increasing marginal utility at some hypothetical margin. But very few things have increasing marginal utility at the margin on which they are utilised, precisely because if people notice that increasing marginal utility, they will increase their consumption, until they hit a new point on the utility curve where the marginal utility is no longer increasing.

For example, shminux, above, talks about education. We can well imagine that education has steeply increasing marginal utility at some levels; once you have made the investment in learning to read, using that knowledge to learn some more things is very cheap compared to the benefits. But people are already aware of this, and so have already acted to do far more than just learn some basics, to the extent that, at the margin, educational consumption appears to be a costly signaling race.

See comment in full context

What resources have increasing marginal utility?

36 points

expand_less expand_more

Jun 14, 2014

Most resources you might think to amass have decreasing marginal utility: for example, a marginal extra $1,000 means much more to you if you have $0 than if you have $100,000. That means you can safely apply the 80-20 rule to most resources: you only need to get some of the resource to get most of the benefits of having it.

At the most recent CFAR workshop, Val dedicated a class to arguing that one resource in particular has increasing marginal utility, namely attention. Initially, efforts to free up your attention have little effect: the difference between juggling 10 things and 9 things is pretty small. But once you've freed up most of your attention, the effect is larger: the difference between juggling 2 things and 1 thing is huge. Val also argued that because of this funny property of attention, most people likely undervalue the value of freeing up attention by orders of magnitude.

During a conversation later in the workshop I suggested another resource that might have increasing marginal utility, namely trust. A society where people abide by contracts 80% of the time is not 80% as good as a society where people abide by contracts 100% of the time; most of the societal value of trust (e.g. decreasing transaction costs) doesn't seem to manifest until people are pretty close to 100% trustworthy. The analogous way to undervalue trust is to argue that e.g. cheating on your spouse is not so bad, because only one person gets hurt. But cheating on spouses in general undermines the trust that spouses should have in each other, and the cumulative impact of even 1% of spouses cheating on the institution of marriage as a whole could be quite negative. (Lots of things about the world make more sense from this perspective: for example, it seems like one of the main practical benefits of religion is that it fosters trust.)

What other resources have increasing marginal utility? How undervalued are they?

36 points

expand_less expand_more

Comments

sorted by

Highlighting new comments since Today at 5:28 PM

All comments loaded

18 points

expand_less expand_more

Time spent with fiction when it's about some coherent body, be it a video game, book, tv series etc. Usually, the more time you spend with that coherent fictional body, the more immersed you become which means you can enjoy it more.

18 points

expand_less expand_more

16 points

expand_less expand_more

I think like a lot of things this is an S-curve - it takes a while to get into it before you enjoy your time the most, but eventually you start to get sick of it.

16 points

expand_less expand_more

8 points

expand_less expand_more

Yes. Incidentally, this is a reason why fanfiction is immensely more rewarding than would be suspected by someone who only looked at the average quality of prose involved.

8 points

expand_less expand_more

16 points

expand_less expand_more

Railroads in Monopoly.

Railroads in an actual railroad monopoly.

Time spent with individuals - I'd rather spend time with friends than strangers.

16 points

expand_less expand_more

2 points

expand_less expand_more

I don't understand the last one. Is the thing that is measured here the quality of individuals you spend time with, or the quality of time you spend with individuals, or the amount of time? In any case, you should elaborate.

2 points

expand_less expand_more

9 points

expand_less expand_more

The last hour I spent with my best friend was more fun than the first hour.

9 points

expand_less expand_more

3 points

expand_less expand_more

That clears it, thanks. The sentence "I'd rather spend time with friends than strangers." just confused me a little because I wasn't sure if you were comparing time spent with friends vs. strangers.

edit. Now I understood it. You were talking about the whole timespan from the start of the friendship until the last moment. I thought at first that you were talking about a single session spent with an individual

3 points

expand_less expand_more

1 points

expand_less expand_more

Railroads in an actual railroad monopoly only have this property at small sizes, not at the limit, because the value of new stops is decreasing as you exploit less and less economically active areas. The fact that the network that's able to reach route N+1 includes route N doesn't make up for the fact that no one was going to N anyway. Plus there are costs to the network of new lines, like new switches needing to be installed, the complexity of managing routes, etc. If you were a railroad exec and you had unlimited resources (so it wasn't merely a question of the costs increasing faster than the benefits), you still wouldn't snap your fingers and cover the surface of the earth with railroad tracks. True examples in the realm of commerce and physical items are pretty much impossible, unless you are a paperclipper.

Other things that have network effects but don't have increasing marginal utility are markets (the marginal stock trader provides no liquidity and makes no trades), Facebook (the marginal account has no friends), telephone networks (the marginal customer makes and receives no calls), etc. Decreasing marginal utility is very universal. Even trust, which is a very good example, is probably more like one of these tipping point things rather than true in an absolute sense. The marginal value of a trust increment may always be positive, but it decreases past the tipping point.

1 points

expand_less expand_more

1 points

expand_less expand_more

In the case of a monopoly on something (railroads aren't really the greatest thing to have a monopoly on, because taking the train has so many substitutes - the ideal would be more like water and air), the number of sources that you wish to own is "all of them." If you lose even one source of that something, that's quite bad, worse than losing the second.

In general, there are two ways of avoiding the un-realism of increasing marginal utility - either have there be some upper limit on the valuable stuff that prevents it from getting out of hand, or have the marginal utility only be increasing within some common domain but decreasing eventually. A monopoly is more like the first of these than the second.

1 points

expand_less expand_more

15 points

expand_less expand_more

Lots of things have increasing marginal utility at some hypothetical margin. But very few things have increasing marginal utility at the margin on which they are utilised, precisely because if people notice that increasing marginal utility, they will increase their consumption, until they hit a new point on the utility curve where the marginal utility is no longer increasing.

For example, shminux, above, talks about education. We can well imagine that education has steeply increasing marginal utility at some levels; once you have made the investment in learning to read, using that knowledge to learn some more things is very cheap compared to the benefits. But people are already aware of this, and so have already acted to do far more than just learn some basics, to the extent that, at the margin, educational consumption appears to be a costly signaling race.

15 points

expand_less expand_more

14 points

expand_less expand_more

I am not sure about the attention example, there looks to be an issue with units. For example, if we think in terms of percentages, going from juggling 10 things to 9 gives ~11% more attention to the nine remaining things. Going from 2 things to 1 gives 100% more attention to the remaining single. And that's just math, not increasing marginal utility.

And if we're talking about resources to be amassed by societies, pretty much anything with a network effect qualifies.

14 points

expand_less expand_more

3 points

expand_less expand_more

Going from 2 things to 1 gives 100% more attention to the remaining single.

The effect will be much higher than that:

Because the brain cannot fully focus when multitasking, people take longer to complete tasks and are predisposed to error. When people attempt to complete many tasks at one time, “or [alternate] rapidly between them, errors go way up and it takes far longer—often double the time or more—to get the jobs done than if they were done sequentially,” states Meyer.[9] This is largely because “the brain is compelled to restart and refocus”.[10] A study by Meyer and David Kieras found that in the interim between each exchange, the brain makes no progress whatsoever. Therefore, multitasking people not only perform each task less suitably, but lose time in the process.

So, by focusing your attention on a single task instead of trying to do two at the same time you'll be done with that task in less than a quarter of the time (and not half as one would expect).

3 points

expand_less expand_more

9 points

expand_less expand_more

Multipurpose components, be they Lego, 80-20 pieces (the industrial version of Lego), electronics components, or disk space for a computer program - the number of things you can build from them grows rapidly as the number of them you have available increases, until you literally have more than you know what to do with.

9 points

expand_less expand_more

4 points

expand_less expand_more

Marginal utility per piece quickly hits diminishing returns

4 points

expand_less expand_more

RichardKennaway

5 points

expand_less expand_more

Intelligence, on both an individual and societal level. Fooming AI is based on that idea. However, increasing the amount of this resource is a hard problem.

Perhaps rationality?

The early stages of any new thing with a lot of potential will behave that way, not only by networking effects, but people figuring out better ways of doing whatever it is, until both aspects reach saturation.

For every thing with increasing marginal returns, is there a saturation point, and what does it look like?

5 points

expand_less expand_more

2 points

expand_less expand_more

Intelligence, on both an individual and societal level. Fooming AI is based on that idea. However, increasing the amount of this resource is a hard problem.

I wonder if this is really true. The world doesn't seem to be dominated by super high g people. If anything it seems like we see diminishing returns from extra intelligence past the 130-140 level. If there were increasing returns from each added IQ point, it seems like we would see vast resources and power controlled by super geniuses.

It seems like easier self-modification is what makes AIs potentially foomy.

2 points

expand_less expand_more

3 points

expand_less expand_more

The world doesn't seem to be dominated by super high g people.

Consider the implications of the Ivies having mean SATs ~>2100.

3 points

expand_less expand_more

RichardKennaway

1 points

expand_less expand_more

The world doesn't seem to be dominated by super high g people.

There aren't all that many of them. But consider, say, Jobs, Gates, Peter Thiel, and the like.

it seems like we would see vast resources and power controlled by super geniuses.

Jobs, Gates, and Thiel again, depending on how vast and how much power. But why would a genius necessarily go for vast resources and power? Would that have helped Einstein think about physics?

Btw, this is a reason I find Batman completely implausible. I'm willing to suspend that and be entertained, but he seems to spring into existence as an adult, fully formed with several lifetimes worth of knowledge, experience, wealth, and power. The only backstory I can make up to explain that is that in a former life as a genius he cracked the problems of how to retain all one's memories through rebirth, and how to ensure an auspicious rebirth. He really does have several lifetimes' worth of knowledge and experience, and then got himself reborn in a position to inherit vast wealth and power as soon as he reached legal adulthood.

1 points

expand_less expand_more

Eliezer_Yudkowsky

4 points

expand_less expand_more

Both your examples are actually just about diminishing marginal penalties as you add more attention demands, moving away from 1, or as you add more defections, moving away from 0. The real question is whether there's a resource with no natural maximum that increases in marginal utility; and this shall perhaps be difficult to find.

4 points

expand_less expand_more

0 points

expand_less expand_more

That's a good way of putting it. I had a vague thought pointing in this direction but wasn't able to verbalize it.

0 points

expand_less expand_more

4 points

expand_less expand_more

I am not sure that trustworthiness has increased marginal utility. Think about ebay or Amazon, what is the difference between 99% positive and 100% positive. Or 97% positive or 100% positive. It would seem to me that with trustworthiness there is a tipping point, at which there is a huge spike in marginal utility, and all other increases don't really add much utility.

4 points

expand_less expand_more

7 points

expand_less expand_more

100% positive on Amazon isn't the same as the 100% trust mean. 100% on amazon really is just a bit higher the 99%. 100% trust can't be expressed by Amazon ratings as the the underlying rating can still be hacked or 'optimized'.

7 points

expand_less expand_more

3 points

expand_less expand_more

A related concept is that of the threshold good. (Perhaps someone with more economics schooling can help out with the formally correct term.) It's something that is useless until a certain threshold amount is obtained.

An example is the length of a bridge. A bridge that goes 90% of the way across a ravine is not twice as good as one that goes 45% across. Both are equally useless (for most purposes). Another example would be the stones in an arch--the final stone, or capstone, is a sine qua non.

The existence of threshold goods is what motivates the concept of assurance contracts, according to which people pledge money iff enough other people pledge enough money to get a project done.

3 points

expand_less expand_more

3 points

expand_less expand_more

But cheating on spouses in general undermines the trust that spouses should have in each other, and the cumulative impact of even 1% of spouses cheating on the institution of marriage as a whole could be quite negative.

In the comments on Scott's blog, I've recently seen the claim that this is the opposite of how traditional marriage actually worked; there used to be a lot more adultery in old times, and it acted as a pressure valve for people who would've divorced nowdays, but naturally it was all swept under the rug.

3 points

expand_less expand_more

3 points

expand_less expand_more

Time spent doing any kind of work with a high skill cap.

Edit: Well, okay not any kind of work meeting that criterion, to preempt the obvious LessWrongian response. Any kind you can get paid for is closer to true.

3 points

expand_less expand_more

2 points

expand_less expand_more

Knowledge, esp. math knowledge. It is difficult to measure the amount as well as the benefit, but it feels like one additional year of math education (which builds upon previous math knowledge) allows to modell (and thus understand in depth) significally more phenomena and structures than the previous years.

The question may be how valuable this ability is. I get the impression that it significantly simplifies understanding conrete practival domains (which can be modelled by the math in question).

This is related to the more general education comment.

2 points

expand_less expand_more

9 points

expand_less expand_more

it feels like one additional year of math education (which builds upon previous math knowledge) allows to modell (and thus understand in depth) significally more phenomena and structures than the previous years.

Since math professors don't look like bodhisattvas, I rather suspect there is a turnover point when the marginal utility starts to decrease.

Generally speaking, when you start learning an unfamiliar skill the first steps have close to zero marginal utility and only when you can actually achieve something does your utility increase. Once you achieve competence, however, I doubt that your marginal utility will continue to increase.

9 points

expand_less expand_more

1 points

expand_less expand_more

I fully agree. But there's probably a turning point for any kind of increasing marginal utility.

1 points

expand_less expand_more

2 points

expand_less expand_more

But there's probably a turning point for any kind of increasing marginal utility.

Probably, though in many cases it will be constrained by available resources first.

2 points

expand_less expand_more

2 points

expand_less expand_more

A society where people abide by contracts 80% of the time is not 80% as good as a society where people abide by contracts 100% of the time; most of the societal value of trust (e.g. decreasing transaction costs) doesn't seem to manifest until people are pretty close to 100% trustworthy.

I don't agree since a society without contracts would be very, very bad. Still you ask an overall excellent question.

2 points

expand_less expand_more

2 points

expand_less expand_more

Yes, a society without contracts is very very bad. But the difference in badness between 100% and 99% compliance is much greater than between 80% and 79% compliance.

2 points

expand_less expand_more

0 points

expand_less expand_more

I don't understand your objection. What good would (written) contracts be if everyone always kept their word anyway?

0 points

expand_less expand_more

0 points

expand_less expand_more

Verbal agreements can be contracts.

0 points

expand_less expand_more

1 points

expand_less expand_more

uranium

1 points

expand_less expand_more

1 points

expand_less expand_more

What other resources have increasing marginal utility?

Matter, if negentropy translates to utility by more than its square root, for example if negentropy translates linearly to increased lifespan and/or population, and we value lifespan/population linearly as well.

How undervalued are they?

I'm guessing that most people do not realize the above, and therefore underestimate just how high the maximum utility of the universe can be.

1 points

expand_less expand_more