Two-Time Lottery Winners And The Economics Law Of Diminishing Marginal Utility

By: Tino Buntic
Submitted: 2007-01-17 16:25:25
Print this article | Tell a friend | For publisher | Social Bookmarking
Rating:
 

Do you think lightning never strikes twice? Everybody dreams of winning the lottery despite astronomical odds. But what about the very few that have hit the jackpot twice? It has happened, but the odds of winning the jackpot twice are even more astronomical.

Don't bet on it happening to you. But you can dream. Let's say you beat the odds and win a megamillions jackpot, say $5 million. That would make you super-happy, right? Of course it would! Now, let's say that lighting struck again and you win the jackpot a second time. Would that make you twice as happy? No!

To explain why, consider the economics principle of the law of diminishing marginal utility. The law of diminishing marginal utility, as stated in Wikipedia, implies that marginal utility from one additional unit is inversely related to the number of units already owned.

As an example, consider a very thirsty man that is offered a glass of water. The glass of water would quench his thirst and would be very useful to him. Let's say, now, that he is offered a second glass of water. That second glass of water wouldn’t be as useful as the first glass (it wouldn’t offer as much utility) because the first glass had already quenched his thirst, but it could still help to hydrate him. If he is offered a third glass of water he may drink it but it would not offer the utility that the first two glasses offered. In short, the more he gets the less usefull it is to him. This is the law of diminishing marginal utility.

So, what happens when you hit your first $5 million dollar jackpot? Your life is completely changed! You can buy material things: exotic cars, house, boat, electronics, whatever you want! You can quit your job. You can travel. In other words, $5 million dollars can make you super happy.

If you are one of the lucky few that win the jackpot twice and get a second $5 million winfall, it would be nice but it wouldn’t make you twice as happy. For example, let's say you quit your job after your first lottery win to have all the time in the world to do whatever you want. A second lottery win cannot buy you any more time; time is finite and you already have it. Maybe a second lottery win allows you to purchase more items like a few more exotic cars. Sure, this can make you happier, but only marginally. You can only drive win car at a time even though you may now own ten.

That's the law of diminishing marginal utility. Think of it this way: Nothing beats the enjoyment you get from the first time you get something or get to do something you’ve always wanted to do.

Tino Buntic is the creator of TradePals, providing free sales leads and free advertising to business professionals and entrepreneurs across The United States and Canada.

Tino enjoys reading blogs and particularly enjoys The Idea Sandbox Blog by Paul Williams.

Article source: Expert Articles

Most Recent Articles in Economics category

  • Developments Prior to the Currency Debates - By: Rupert Mackenzie
    During the 18th century England was nominally on a bimetallic standard (consisting of silver and gold), however, the mint price of silver was intentionally undervalued to keep it out of circulation and thus a de facto gold standard functioned: banknotes issued both by the Bank of England and country banks were convertible into gold upon request.
  • Investors Moving Money to European Banks Fearing U.S. Economy and Major Bank Failures - By: Brett Schoneman
    "Many investors are placing part of their hard-earned money out of harms way into foreign banks that do not have exposure to the U.S. sub-prime mortgage crises," says Kevin Wessell, CEO of Offshore Company. Mr. Wessell is also the author of "Build Your Financial Castle" and a nationally renowned asset protection seminar speaker.
  • The success of Africa's exports - By: Paul McIndoe
    While Africa faces tremendous challenges on the road to integration into the world trading system, many African export sectors have actually outperformed world market growth.
  • The 10 Movers and Shakers in Turkey's Banking Sector - By: James Kara Murat
    In Turkey there are many sectors active and dynamic and the banking sector is one of them. The dynamism of the banking sector is a result of the lifting of certain restrictions
  • The Biggest Banking Mergers & Acquisitions in Turkey - By: James Kara Murat
    Turkey is making some economic reforms in order to become part of the European Union. As a result, the Turkish banking industry has seen many changes.
  • Barcelona economy - By: Kirsty Connell
    Barcelona has a highly diversified economic structure. Find out the facts which lead to the growth of Barcelona economy.
  • Indian Retailers Accelerate Evolving Pace - By: Gaurav Doshi
    Retail industry in India is gradually edging its way towards becoming the next boom industry with contributing more than 10% to Country’s GDP and around 8% employment. Several Indian and global players are developing strategies to enter such a fast paced and growing market. Also the whole retail industry is taking new shape, the traditional market giving way for the more organized market in the form of departmental stores, hypermarkets, supermarkets and specialty stores.
  • The Real State of the Economy - Good or Bad? - By: Stephen Morgan
    There is something about the US Economy at the moment that I for one don’t get. Now it may be that being a brit, I am a little slow on the uptake; this has been known to happen every now and then but at the moment I cannot fathom several things out.Firstly, the UK economy, despite the Chancellors proud claims, is not in exactly the best of shapes but in the US, the Government is technically, if not practically bankrupt.
  • India Emerging As A Global Healthcare Destination - By: Christine Macguire
    Health is vital for ethical, artistic, material and spiritual development of man. It is very certain that of all the gains, the gains of health are the highest and the best. Traveling abroad for treatment has been an age-old practice.
  • India-Srilanka Free Trade Agreement(FTA): The Success and Road Ahead - By: Dr Suvrokamal Dutta
    The Free Trade Agreement between India and Srilanka came into full existence from 1st March 2000.This FTA basically deals with the modalities of the Duty Free Import of the Goods manufactured in Srilanka. Which exempt specified goods imported under Indo-Srilanka Free Trade Agreement from the Import Duty up to 100%.