On the diminishing marginal utility of Stuff

One of the irritating things about money is that its value, and the extent to which you can top out your use for it, very much varies according to your passions.

For example, both Charles Stross and I are creatives with a passion for telling stories - but the media we strongly prefer have pretty dramatic effects on the utility of money for both of us.

He mentions having already effectively topped out on the utility of cash for him - as a novelist, there's a limited extent to which more money helps him fulfil his passion.

By contrast, the utility of cash for me tops out around the $300m / yr mark, that being the cost of making and marketing a top-end feature film every year. Below that, there is definitely utility in every dollar as far as Doing What I Like goes - although of course diminishing returns still apply.

And for some people - like Elton Musk, whom he mentions - there is effectively no top end in sight. If your passion is to get to Mars, you really don't hit a point where more money wouldn't be helpful.

Some people don't actually have that money. It's all a money merry-go-round of debt and credit and weird financial instruments and shell companies in tax havens. It doesn't take much for it to all go wrong.

(http://www.forbes.com/sites/forbeswomanfiles/2012/06/19/the-...)

Or the money isn't liquid. It's in a huge private funpark, or IP rights that aren't making much at this moment.

Michael Jackson 'nearly bankrupt' (http://news.bbc.co.uk/1/hi/entertainment/4342255.stm)

For a small (tiny?) number of people their estimated worth or their position on some 'rich list' is equivalent to HN karma, or reddit karma - meaningless but strangely compelling.

William Gibson[1] has a nice take on the super rich. Those weird families cloning each other and living in space colonies or engaging in high concept 'pranks' against their enemies.

[1] Bad form to mention the competition?

If you meet somebody who literally cannot get enough food, it's pretty easy to recognize that there's something wrong. If their desire to eat wrecks relationships, causes harm to their health, makes it so that all they can talk about is the next meal, you say: that's not right.

But when it's money, it's much harder to recognize that insatiability is a sign of pathology.

That's not to say that all hyper-rich people are pathological. For some it is indeed a favorite game (Buffet) or a tool for big plans (Musk) or the result of doing something they loved (Page and Brin).

But having worked in the financial industry, I have met people for whom the desire to amass incredible wealth is a sign of deep, deep problems.

> Another example: the late Steve Jobs. Doubtless he received the best medical care that money could buy—but it wasn't enough to save him because a cure for his pancreatic cancer didn't exist at any price.

I'm not a Jobsologist, but didn't he eschew traditional treatment in favour of alternative medicine for something like 9 months?

He seems to make the implicit assumption that you can only spend money on goods, and not services.

I have all the Stuff I could need or want (save maybe an rMBP instead of my Air, or a new camera or something), but if I had more money I would almost certainly spend it on things like airfare, hotels, seed-stage investments, and the like.

There's a lot more one can do with money than "buy stuff to fill up one's house" or "fund research".

WRT this: "I have three answers." I would add a fourth answer: the stupendously rich have a lot of assets in stock and so on that's not really about the money, per se, but about control. It doesn't seem like Zuckerberg, or Gates before him, deeply cared about having 1x billion + z billion; they cared about having control over Facebook and Microsoft, which happens in the form of stock ownership.

However, I don't see this as the motivating factor for the person Stross mentions in his last paragraph, so, to the extent the post is mostly about that paragraph, I don't have a great answer.

It starts off interesting, but ends a bit abruptly. If possible, I would like a little more at the end about your thinking about all this, some philosophy etc. (Unless it was all a political jab).

PS. Mitt wants what ALL politicians want. A roof over his head, food on the table, running water and unlimited power.

An well written little essay that buries the lede on the last paragraph. ;-)

Interesting essay until it revealed itself only to be an elaborate pot-shot on a politician he apparently doesn't like.

Steven Randy Waldman of the blog Interfluidity has a great post which makes the case that "Wealth is about insurance much more than it is about consumption."

http://www.interfluidity.com/v2/3487.html

It's a great insight, and the thought experiment to "[c]onsider a libertarian Titanic" is illustrative.

(Though, it's a unfair slur to label the scenario 'libertarian', as that word does not mean 'everything is reduced to dollar purchases' except in a caricature promoted by critics. Just calling the scenario a 'pay-to-play Titanic' would be descriptive without extra partisanship.)

The examples he give seem to be more about "money can't buy everything" instead of diminishing marginal returns.

Under diminishing marginal returns of Stuff, I would have expected something akin to "Gadget A generation n+1 is only an incremental improvement over Gadget A generation n, we should aim to build Gadget B instead".

This is one of the major reason for mandatory wealth redistribution (= taxes etc.). It makes poor people significantly better at the expense of making rich people slightly worse off. The society as a whole benefits from this.

Money/stuff has a diminishing buying power, i.e. you can only purchase and consume so many things. But it doesn't have diminishing creative power.

For all the billionaires out there with too much money, look up the Medici family.

Expanding on the part about wanting to buy therapies but not being able to - a place where rich and poor are in a similar boat, but it isn't the same boat, as suitable wealth means you can start to do something about the environment of research, not just live in its shadow:

http://www.fightaging.org/archives/2012/08/ultimately-self-i...

[Of] the world's high net worth individuals, most [do] very little in the way of funding research into aging or the conditions of aging. [Or any other medical technology for that matter]. It is their inaction that is opposed to their own self-interest: they are all aging to death at the same pace as the rest of us, after all. When it comes to access to medical technology the world is remarkably flat: the poor struggle in this as in everything else, but the wealthy have no more ability to buy a way out of aging (or heart disease, or cancer, or any of the other conditions that attend aging) right this instant than does anyone else. What they do have is a far greater ability to create a near future in which rejuvenation biotechnologies exist and are just as widely available as any present day clinical procedure.

It is in the self-interest of everyone who can significantly speed up the development of ways to reverse aging to set forth and do exactly that - but very few are making the effort. [Consider Ellison's medical foundation, or Thiel's funding of SENS as some of the few, lone examples]. At some point it will become evident to the public and the world at large that aging to death whilst surrounding by wealth is insanity in an age in which those resources could be used for the development of age-reversing medicine: ways to repair mitochondrial DNA, break down accumulated metabolic byproducts that clog up cells, clear out senescent cells, restore declining stem cell activity, and so forth. But as yet this is not obvious enough to those people who matter.

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Expanding on the part about vision versus the drive to gain greater amounts of money: it's a challenge and a rare thing to be both a zealot and very wealthy. The roads to being these things are both long and quite different; either is a process more than a thing you are:

http://www.fightaging.org/archives/2012/02/one-wealthy-zealo...

My suspicion is that it is not just longevity science that looks in vain for wealthy zealots, but that in general any grand cause that people can feel very strongly about also lacks wealthy zealots. It seems to me that there is in fact little overlap between the small population of zealots for a cause, people willing to devote their working life and significant resources to a grand project, and the small population of very wealthy people, those with a net worth of $100 million and up.

We can speculate as to why this might be. For example, I might try to argue that the sort of person who can successfully run the long and unlikely process of becoming very wealthy is the sort of person who doesn't think about what they can do with money. They are not doing what they do for money, and the process is their passion. Someone who was a zealot for a cause would have stepped off that process long before reaching the possibility of attaining a very high net worth. Having a mere seven figure net worth for most people enters the territory of being able to prioritize volunteering over working, or funding a small mission in their favored charity. The temptation to break off and work on doing good rather than continually doubling down and doubling down on the process is ever there.

Or to put it another way, the passion for the process that will make a person wealthy takes up the much the same mental space as the passion for a cause: there are only so many hours in the day, and only so much attention that a person can give to any one set of information. So you are unlikely to see a person who has (a) accomplished the necessary devotion to work and process for a shot at becoming very wealthy, but also (b) put in the necessary work and process to become a zealot.

Or to put it yet another way, neither becoming exceedingly wealthy nor becoming a zealot are things that just happen one day out of the blue. They are each a fair way down their own different paths of effort, realization, and specialization.

Ok, so I felt the article was leading up to something profound, but then it ended with Romney. I am disappoint.

Um, of course Mitt Romney wants to buy something unavailable at any price: The Presidency.