Don’t underestimate middle aged men in lycra with too much money to burn. They’ll spend hours obsessing about individual components and won’t bat an eye when it comes to spending $15k or more (Canadian, a bit closer to $10k USD/EUR) on a brand new bike every couple years, $3-5k on the newest dimpled wheels from the big Z manufacturer, tires, and so forth, all in the name of besting their mates in the Saturday morning world classic coffee ride.
While I don’t strictly identify as above (I’ve more sense than to spend $1000/watt, or so I like to claim anyway), I do my fair share of purchasing the extra few watts. I’ve spent an embarrassing amount of time obsessing about what the optimal tire choice is for my next Cat 3 CX race. At least I’m realistic enough to know the hoards of 16-20 year olds with more handling skills and less fear will destroy my every day of the week. Joke is on them because they’ve real life coming to crush them :p
In all seriousness, I know fully well the 5-10W gain is marginal for me at best and will only get me so far. Genes, age and hours in saddle cannot be purchased. Being a late comer to the sport and not being blessed with the requisite body type, I can’t have any one of those three, but I can however throw more money at the hobby, unlike the younger ones can. And why not enjoy myself while doing so and ride around in style.
As for diminishing returns, don’t talk to bike enthusiasts about those. They’ll only be outdone by audiophiles