Tuesday, February 5, 2013

Diminishing Marginal Utility of Sugar

Here is a nice illustration of the economic idea of diminishing marginal utility, applied to sugar, from the label of Honest Tea’s Green Dragon tea:

It is a good example because sugar is commonly overused, in part because people imagine that its effect is proportional to its amount, that is, that there is a linear relationship between the amount of sugar and the perceived sweetness. In fact, the connection is anything but linear, and you might find that you get half the sweetness in a cup of tea (or something similar) with one tenth as much sugar.