Exceptions to the Law of Diminishing Marginal Utility

Under the assumptions of homogeneity, continuity, reasonability, constancy and rationality, the law is deemed to be universal. In certain cases, however, it has been observed that a consumer tends to attain increasing marginal utility with an increase in the stock of a commodity consumed or acquired. Such cases are treated as exception to the law of diminishing marginal utility. These exceptions are: 

1. Hobbies: 

It is often argued that in the case of hobbies like stamp collection, collection of antique goods, collection of old coins etc, every additional unit gives more pleasure, that is, marginal utility, tends to increase. No doubt this is true, but, it is not a genuine exception to the law of diminishing utility, because in such cases, homogeneity condition of the law is violated. Indeed each time a new variety of stamp or coin or antique is collected by a person but not of the same variety. 

2. Alcoholics: 

The law seems to be inapplicable to alcoholics as intoxicants increases with every successive dose of liquor. This is true, but the rationality condition of the law is violated. The introspective behaviour of an alcoholic at that time is irrational or abnormal. 

3. Misers: 

In the case of a miser, it is pointed out that greed increases with every additional acquisition of money. Hence, the marginal utility of money does not diminish for him with more and more money. But, when the miser spends his money his utility of the commodity will be diminishing perhaps more rapidly than in the case of others. Hence, a miser’s behaviour cannot be a significance exception to the law of diminishing marginal utility. 

4. Music and poetry: 

In the case of music and poetry it’s commonly experienced that a repeat gives a better satisfaction than the first one. Hence, it is thought that the law of diminishing marginal utility may not be applicable here. But there is a limit to repeated hearing of the same music and poetry because, it will become monotonous and yields dis-utility  so it is not a genuine exception to the law. 

5. Reading: 

Since more reading gives more knowledge a scholar would get more and more satisfaction with every additional book. But, here we may point out that it is not a real exception to the law as the condition of homogeneity is violated here. Knowledge and satisfaction increases by reading different books and not the same book over and over again.


Notes provided by Prof. Sujatha Devi B (St. Philomina's College)