Diminishing Marginal Utility
The microeconomic law of diminishing marginal utility states that while accumulating a good each successive unit of that good will be less satisfying to acquire than the one before it. A study at the University of Cambridge shows that when a small sum of money is on the line, poorer people learn more quickly than their wealthier counterparts.
A number of abstract shapes were flashed in front of 14 participants. After each shape appeared for 3 seconds, a picture of either a 20-pence coin (roughly 40 cents) or a scrambled image followed. A card of one particular shape was always followed by the coin, and subjects were told that they could take a 20-pence piece home if they could accurately predict when the money card was the next one up. The participants had in personal assets an average of about $1,700 in their bank accounts, which ranged from zero to nearly $6,000. The group’s average income was just over $20,000, spanning from no income for students to the equivalent of about $60,000 for the most well-off.
There was an inverse correlation between how much money a person had (assets and income) and the swiftness with which they were conditioned. The poorer people tended to figure out which card signaled money ahead within about 12 trials, says Philippe Tobler, whereas the richer people took about 35 trials.
The team next repeated the experiment while the subject’s brains were scanned by an fMRI (functional magnetic resonance imaging) machine. Researchers focused their scans on the midbrain (which contains neurons or nerve cells that produce dopamine, a neurotransmitter central to reward-based learning), and the striatum (another reward-based center located under the cerebral cortex). This time, however, the participants did not have to physically respond. Once again, an inverse association between wealth and learning appeared, with poor people displaying more increased activity in the midbrain and striatum.
“Money Talks: A Brain Image of a Microeconomic Theory,” by Nikhil Swaminathan