This may seem silly but it’s true – donuts are a great way to test the law of diminishing returns.
As a brief refresher from your school days, the law of diminishing returns states that at some point, each additional “unit” yields lower returns. In other words, you get less out of it than you put into it.
This same law applies to consumerism. At some point, you get less out of stuff than you put into it. As you over-indulge yourself through dining out, buying electronic goods, shopping, watching too much TV, etc, you reach a point where you are putting more into it than you are getting out.
We tested this law once in high school through the consumption of donuts.
The Donut Test
This test is something that you can do yourself at home.
Step 1: Buy one dozen donuts. We used simple glazed donuts, but you can use whatever you like.
Step 2: Eat one donut and rate your satisfaction level with the donut on a scale of 1 – 10 (10 being the highest). Our test subject rated the donut a 10.
Step 3: Continue to eat donuts and rate each one immediately after eating it. Our subject rated the 2nd donut a 10, the 3rd donut an 8 and so on.
What was astounding to see was just how fast his satisfaction level dropped. The 4th donut fell to a 4. As he filled and started to over-consumer, the same donuts that were a 10 only moments before became 1s.
The donuts hadn’t changed. However, all things are relative. The first donut was great because our subject was hungry and excited at the prospect of eating so many donuts. With each ensuing donut, his appetite disappeared and was replaced with disgust.
Each donut returned less and less even though our subject was putting the same effort into eating them. And yes, he ate 10 donuts.
The effects of over consumption
Our test subject was lucky. He walked away with nothing more than a stomach ache.
The effects of rampant consumerism are far more detrimental. Let me give you some examples.
- The credit crunch is the result of people who couldn’t get enough. They wanted more house than they could afford. Although a smaller home with smaller monthly payments would have sufficed, many Americans chose to over-extend themselves. As the market collapsed, the return diminished and they found themselves putting more in than they were getting out. Feeling the pressure, many chose or were forced into foreclosure.
- Spending some time around the television being entertained can be a great way to relax. However, you can quickly over-watch TV. Rather than enjoying one show and then spending time together as a family, reading or working on a project, many Americans spend hours each day watching mind-numbing shows. The negative effects of TV are very well documented: violence, obesity, poor grades, etc.
- One area that my wife and I personally struggle with is eating out. We don’t spend a lot of money on clothes or electronics. We don’t even own a TV. However, we really enjoy eating out. Sometimes it’s because we don’t have time to prepare a meal, but mostly, it’s because we enjoy getting out and eating good food. The problem is that we tend to blow through our Dining Out budget pretty fast. In fact, we rarely stay within that budget. We have to pay for our over-eating out from another budget area or from savings. If we use savings, then we are putting ourselves at risk by dipping into the emergency fund.
Overcoming your addictions
Nobody wants to call it an addiction, but in most cases, it really is.
I know that you can “stop at any time,” but here’s some help either way.
- Stop Lying, 5 Ways to Stop Overspending
- 6 More ways to stop overspending and save money
- Timebox your way to better financial health
Ultimately, you need to recognize when you have reach the point where the benefits you are receiving are fewer than the resources that you are putting in.
Don’t keep eating donuts.