Law of diminishing returns
This law states that achievement in any area of life adds to happiness only up to a certain point. Beyond that point, more and more gains in any one particular area adds less and less to happiness.
As I invest more time, energy, money, etc. into something, there eventually comes a point where I stop reaping the results I used to in proportion to my investment.
For example, if I were to eat my first 3 slices of pizza, my happiness level goes up in proportion to the number of slices I consumed. However, on my 4th slice of pizza, the joy starts to slow down and on the 5th slice my happiness level starts to plateau. Eating more slices of pizza will not increase my happiness anymore.
I used to explain this concept to my clients all the time when I was working in the advertising tech industry. More money on the campaign =/= Better ROI. There will be a point, no matter how much you spend on your advertising campaign, the results will plateau. The job of the technology is not to increase your ROI infinitely, the technology helps you identify where the optimal point is to ensure that you get the most value out of your advertising investments.
This concept can be applied to our daily life as well, on a great night out with your friends, is it worth going for another round of drinks - will your happiness level increase if you stayed till 3am?
The optimal point to leave the party would be right before everyone starts getting sloshed and sleepy, beyond that point would’ve been a lot less fun. So don’t feel FOMO for leaving the party a few hours earlier, the person who stayed till end doesn’t necessarily have the most fun.
Let me give you, another example on studying, if you are sure that you will get 90% of the answers in an exam correct, should you stay up all night to study more?
But the law of diminishing returns states that that amount of time spent on the subject will only allow you to increase your knowledge by a small amount compared to what your ROI was when you started. In short - if you were to pull an all nighter to study, you might only increase from 90% to 92%.
When you reach your optimal point, it is better to allocate your resources to something else that provides you a higher ROI. For example, spending your time getting a good night rest.
I like to have the Law of Diminishing Returns in the back of my mind when making decisions. There’s clearly a balance to be struck here. When it comes to things like ‘should I have that 16th slice of pizza’ or 'should I stay until 3am at this party’ or 'should I take up this extra project over the weekends’, I think it’s useful to keep in mind.