The Marginal Utility of Saving – When is it not worth it?


marginal utility of happinessI’m sure that we’ve all encountered scenarios where we go out of our way to either save money or get a better deal. I’ve certainly had to decide between waiting in a two-hour line to purchase train tickets with credit card versus using a machine that only takes cash (I used the machine).

Likewise, I came across the discount bakery aisle at the local grocery store yesterday. A box of day-old twelve donuts were discounted to $2. In contrast, a normally priced donut was 60c apiece.

That’s right. These are the first-world problems that I have to deal with! I could either get a dozen day-old donuts for approximately the same price as three fresh donuts!

How much happiness would I have with a dozen partially stale donuts versus three fresh ones? For me, the marginal happiness I experience is simply having ONE donut. I would be happy having one donut, saving the calories, and be done with it.

Which option did I eventually choose?

I bought the dozen discounted donuts!


Arguably I could have done without the extra calories, but I also had extra mouths to feed.

What would you have done in this situation?


Happy July 4th to everyone!


(Photo courtesy of Flickr)

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