It's an important concept to understand in many aspects of life. In social and economic policy, it's important to remember resources are allocated per marginal utility, not by what they're worth. I.E. water is worth more to me than music, but I spend more money on music than water, and the music industry makes more than public water utilities. Seems obvious when stated like that, but it's often forgotten I find.
To stick with the motorcycle analogy, suppose I am designing a motorcycle as a manufacturer and I find that it takes 6 bolts to securely fix the engine to the frame. If I use fewer, accidents are very likely to occur, I will get sued, sales will collapse. As it is, accidents will still occur once a year - but that's the industry average (let's say) so I can pay out compensation for that one accident without seeing any real impact on sales. (I have magic litigation insurance so my liability costs are totally predictable for this example.)
Suppose each bolt costs me $10. If I add 8 bolts, the risk of failure drops to zero. I calculate the cost of accident involving my bike, divide it by the number of bikes I expect to sell, and I find it's about $25 per bike; installing those two extra bolts creates $5 of marginal utility or 2.50 each so I go ahead and do it.
Should I not go ahead and add 1 more bolts? No, because it will cost an additional $10 for no noticeable increase in safety, so the marginal utility is -$10.
That's a meaningless statement, because you can't compare/subtract marginal utility and marginal cost. The latter is measured in some currency (e.g. USD) but the former is not.
You can compare the marginal utility of X with the marginal utility of the cost of X, but then what you're really doing is comparing the marginal utility of X with the marginal utility of Y, where Y is the highest-utility alternative use for the marginal cost of X.
Anyway, back to my actual point: the comment to which you responded was talking about marginal utility. I'll attempt to elaborate on the example (music vs. water). Water is more valuable than music. That sounds right intuitively, but what do we mean? What we mean is that if we had to give up 100% of something, we'd choose to give up 100% of music instead of 100% of water. But all that says is that there's some finite amount of water that has higher marginal utility than all the music in the world. And that's right. If I need a minimum of 300ml of water to live per day, then I'd give anything for that 300ml. Maybe I'd give a lot for the an extra 300ml per day also, but it's not as important. And by the time I'm drinking 5 litres per day, I'd probably rather spend money on CDs than buy more water, as the marginal utility is zero.
No. That's marginal cost.
> In economics, utility is the satisfaction or benefit derived by consuming a product; thus the marginal utility of a good or service is the change in the utility from an increase in the consumption of that good or service.
https://en.wikipedia.org/wiki/Marginal_utility
By contrast, marginal cost is about change in a producer's cost function with changes in quantity,
> marginal cost is the change in the opportunity cost that arises when the quantity produced is incremented by one unit, that is, it is the cost of producing one more unit of a good.
https://en.wikipedia.org/wiki/Marginal_cost
The commenter starts out using the word "cost" along with the rest of his example which is elaborated upon to describe the MC=MR profit maximizing function.
Marginal utility, would be the increasing/decreasing value at the margins, for each additional screw.
Here I believe the point is in process engineering that more or less, something big may be disguised as something small. That you must thoroughly know your process to understand the problem(s) at hand.
It seems more analogous to "the straw that broke the camels back."
I was taught the concept using the water example in undergradudate, and find the analogy is spot on. Other comments are considering more complicated marginal effects or the intersection/equilibrium of multiple marginal effects and confusing the point.
I didn't claim anything such as this and I'm having trouble understanding what you are responding to in my post.
A utility function is just a value of utility received at different quantities and costs. They are just basic models for helping to simplify our understanding the world. There's no need to begin comparing expertise with utility functions. The author is talking about the utility he receives at the margin of one additional widget in his decision making process, and what that this type of scenario (when a commonly cheap item can, in our decision making process, can have a high marginal utility--ie quantity is only 1 and 1 is necessary for a finished product) means to us in our human experience.
"Right now this screw is worth exactly the selling price of the whole motorcycle ..."
This is not marginal utility as somehow the value of this screw is equal to the entire amount of the motorcycle. There is no marginal utility to be had because decreasing it or increasing it has no effect. This would not be a continuous function. You could talk about the marginal utility of one having a motorcycle or no motorcycle. It's not related to the increase in screws.
Additionally, to say that expertise in a subject is not needed is perplexing to me. So much so I literally can't begin to understand how you'd surmise such a claim honestly.
How much economics did you take? I ask because it sounds like your understanding is that from a class or two, and not the bulk of your education. I think if it was we would not be having this discussion or you'd somehow prove it instead of reiterating the same points.
I don't see it as productive to respond on the internet to the posturing and credentialing about who has seen more utility functions or taken more econ classes, as you wrote above.
I can assure you that Robert Pirsig garners utility at different costs and quantities in the scenario he described. That is all that a utility function is: a function of utility at varying quantities. This is an elementary topic and there's nothing more to be argued here. I'm sorry that explaining it again rubbed you the wrong way and encouraged you to write a condescending response towards me.
[1] http://bigthink.com/re-envision-toyota-blog/will-the-next-wa...
If I read the situation correctly, the motorcycle with this screw is certainly not valueless. It can be turned into a working motorcycle far more easily than most other things can be turned into a working motorcycle. If it would take a competent technician an hour to remove the screw, then the screw shouldn't affect the selling price of the motorcycle by more than a couple of hundred dollars.
It's important to remember that small, trivial-seeming things can actually be important, which I think is what he's pointing at. But it's also important to remember that a thing's potential has value beyond its current abilities.
That is to say, without the screw, there is no motorcycle; without the motorcycle, there is no screw. In this concept, things cannot exist without being connected, dependent, and intertwined with one another. There is nothing that exists independently.
[1] https://en.wikipedia.org/wiki/Prat%C4%ABtyasamutp%C4%81da
I won't defend the book vigorously, but your reading of this part seems both superficial and easily dismissed with a moments thought. Pirsig is obviously driving at something deeper, even if you don't think he completely gets there.
It's a book about thinking and changing how you do it, after all. You can't expect to get much out of something like that if you can't or won't examine your own cognitive bias as you do.
One of the major themes of the book is defining "quality" and "value".
If it can't fulfill this core function without the screw, it is valueless.
Of course, you can pawn the motorcycle for thousands of dollars, but for that, you would have to have a marketplace and buyers. You can also turn some parts into tools and probably repurpose the tyres into something useful.
But again, to do that, you would have to have the knowhow and the necessary tools and time for repurposing.
If you were in an isolated environment with no other people around and no additional tools, a motorcycle that doesn't function is as good as "valueless".
With that said, the motorcycle is clearly not value-less without the screw the same way it is not value-less without a rider.
The instant you dismount the motorcycle it is no longer physically capable of performing its function. Yet it of course still has value.
I don't think your comparison makes sense. A motorcycle is not broken without a rider; it is not being used to move from point A to point B, but it is capable of being used to move from point A to point B.
A broken motorcycle is not being used to move from point A to point B, however it is not capable of being used for that purpose. The broken motorcycle is clearly at a lower state than a functional motorcycle.
Perhaps a comparison that works would be (a broken motorcycle + a rider) is as worthless as (a working motorcycle + a broken/ignorant rider).
Neither can be used to move from point A to point B without the addition of their missing component.
If we assume I have the appropriate skills/training to successfully operate the motorcycle that is missing a rider can we not just as easily assume that I have the appropriate knowledge/materials to add the missing screw?
E: The point I'm trying to make is that it is the same scenario. We could argue over which assumption is more practical (how hard is to to find and install the screw vs ride a motorcycle) but that is a separate point.
The screw seems most important when it is the 'weak link'.
But the same is still true of all other components.
I guess Pirsig was making a point about value and not about potential value, which is leading to a larger point. In the moment, value is all you have. Potential value is a future value that requires time to realize.
I have two separate reactions to your suggestion that it's important to remember potential value, the Zen reaction and the Writer's reaction.
Even though Pirsig wasn't going for Buddhism, it's fairly consistent with Zen thinking to make observations about the momentary values of things. My Zen point is that the purpose of meditation and much of Buddhist practice is to see only value and to eliminate potential. When you learn about how to meditate, you learn how to stop your mind from thinking about the future and concentrate completely on the here and now. Remembering something's potential value is antithetical to this way of thinking. Not because it's untrue, but because it's un-now.
My writer's reaction is that while it will always be important to remember things other than the point the author was making. Is adding your point to the author's words helping us to understand his? If Pirsig reminded us about potential value in this sentence, would it improve this particular narrative? Does it open a path that gets to his larger point either more efficiently or more effectively? It might, that might be part of Pirsig's thesis. Or it might be taking a narrative path that doesn't lead to the same place.
It's important to see not just the value of the quote itself - the truth or completeness of an individual passage - but to also remember the potential value of the words as being the destination of the story -- where they lead and where it ends is as important as where it was at any given moment.
Thankfully, I had an option at he didn't have, which was punt to the bike shop and pay them 12 bucks to get the thing out and chase the threads.