Marginal Return

What is the cost of putting that extra effort? Does it give you the desired return? When do you stop? And why do you need to stop? A lot of questions, and unlike catchy commercials, not one single answer here.

Marginal return in pure economical terms is defined as

The rate of return for a marginal increase in investment.

It is that increment/rate of increment in the output when you increase one of the inputs by 1 unit keeping everything else constant. Easy to evaluate when the unit which is being incremented is money. You spend five thousand extra bucks and you get upgraded to business class. Spend a thousand bucks and get access to Spotify for a year. Spend extra five hundred and maybe accelerate in the queue for getting a driving license. Why is it so easy to see the value you are getting on spending this extra money ? For me it is because it’s easy to evaluate what have I done to get this amount in my pocket. As a salaried employee I would know what INR 2000 means for me in terms of the time I need to re-earn that and whether the services that I am redeeming for that labour of mine is worth it or not.

So in a sense it is pretty easy to gauge if buying the 64Gb version or the 128Gb makes sense for you. The question is how do you measure the marginal cost of thoughts and their produced outputs? Before getting to how, we need to find out why and what of this.

Decision making is the most important thing in our everyday life. We are making small and big decisions, voluntary and involuntary decisions, every second of our living life. Some have meaningful consequences in the larger picture, while some don’t. But each one comes at a cost. Cost of your headspace which is directly related to your happiness, peace and ultimately overall well being.

We run on autopilot more than 90% of our wake-up time (100% of the time when we are asleep :P) You already know what you’re gonna do a lot of times when options come in front of you. That’s what you have been training yourself to do most of your lives; only the somewhat or the most important decisions are where you start toying with thoughts. We however need to understand, how much thinking is required thinking that’ll give us good returns and what amount is over-thinking that just yields diminished returns no matter how much thought you put in it.

Evaluating outcomes, placing sequence of things is good but only to a level which can tell me whether it’s okay or not okay to take a step in a direction which is unknown. No amount of thinking will be able to take me to a rigid conclusion. Hence over time, instead of trojanising my mind with the same thought over and over which either might lead to amplification of good outcomes, or take me to place which only highlights the stupid aspects will start yielding diminishing returns. My actions will then either be too cautious or too carefree. I was going through stoic literature and found some very meaningful tools to help me understand when to stop.

Headspace like all other things is limited in quantity. We think that just because a thought/activity in the brain can be sustained for a very long time, it’s okay for us to ponder over it for a long long time. Headspace needs to be as clean and empty as the RAM of your devices for us to keep functioning at the optimum level. If you use to analyse every small thing that went wrong, every small conversation you couldn’t do/wanted to have in a different way, the ad delivery service or the weather in general, you are not providing a very good input to your brain. Result is you’ll be getting very marginal returns on your overall level of happiness/satisfaction in life. We do not have a unit to measure headspace and so it’s not easy to evaluate the marginal gains of keeping all thoughts stuffed in your mind.

Evaluate what’s in your circle of control and what’s not. A good place to stop thinking is when I start thinking about things outside my circle of control. Circle of control are things directly in my control. Circle of influence usually is the people, belief systems, health conditions which I should keep in mind while taking some calls. Circle of concern is the place where a lot of fringe events, that I have no control over lie. I shouldn’t really care about them.

Define for me now what the “indifferents” are. Whatever things we cannot control. Tell me the upshot. They are nothing to me.

Epictetus, Enchiridion

Losing sleep over stuff hardly helps in taking right decisions. It makes us lose our autopilot for the other 90% activities and thus life starts to get affected. Similar analogy is true with money. Till the time you can take care of Maslow’s 1st level of requirements, money won’t get you a lot of happiness and satisfaction. Hence working hard for money makes sense only upto a certain level of needs and wants. Beyond that I am just working way to hard to get a lot of money which ultimately will have a very marginal impact on the overall quality of my life. Physiological needs need money. All of the rest need perspective and principles.

You can discard most of the junk that clutters your mind…and clear out space for yourself… by comprehending the scale of the world… by contemplating infinite time… by thinking of the speed with which things change — each part of every thing; the narrow space between our birth and death; the infinite time before; the equally unbounded time that follows.

Marcus Aurelius, Meditations

Once again, I think the article just went around in circles but the point that I want to convey through this one is that, everything has a cost attached to it. And only upto a threshold, the inputs have a proportional or disproportionally good impact on the outputs. Beyond that point it’s too much investment on the input to get very little output and if channeled elsewhere can lead to a much better result in the larger picture of our lives.



SST View All →

A graduate from BITS Pilani, class of 2019, I am currently working as a Product Manager at Flipkart. I like to write about things that get stuck in my head. By writing I make sure everyone knows what absurd thoughts I have :P Thanks for visiting.

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