No. 137 · Work · Systems
Law of Diminishing Returns
Adding more of one thing eventually buys less each time, and can make things worse.
In the Almanac
“Malthus and the fixed field”, 1798 · “Subway”, 2016–2024
Both stories in full, three ways to use it and where it misleads.
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Questions
What is Law of Diminishing Returns?
The Law of Diminishing Returns says that adding more of one input, while everything else stays fixed, eventually yields smaller and smaller gains. Malthus saw it in farms; Subway's franchisees said new stores took sales from old ones.
How do you use Law of Diminishing Returns?
To use it, watch the margin: ask what the next hour, dollar or workout will really add. When gains shrink, move resources elsewhere or change the other inputs. More is only better until it isn't.
When does Law of Diminishing Returns matter?
Law of Diminishing Returns is one of the 43 mental models for work, the situations where you ask: How do I get the right things done? Within that, it belongs to “Focus and priorities”, alongside Bikeshedding, Leverage and Manager’s Schedule vs Maker’s Schedule.
What is an example of Law of Diminishing Returns?
Two stories show it at work: Malthus and the fixed field (1798) and Subway (2016–2024). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.
Which mental models are related to Law of Diminishing Returns?
Law of Diminishing Marginal Utility, Pareto Principle and Chaos Theory. Law of Diminishing Returns itself comes from systems.