Laws of Demand and Diminishing Marginal Returns Outside Economics

Yesterday, I posted on a synthesis between economics and the other sciences. In this blog post, I provide a couple examples of such theoretical crossover. This is from a current working paper of mine on the endogeneity of social systems.

The laws governing the physical universe are constant through time and space; however, they must be discovered by someone to be brought into the set of scientific theory and knowledge recognized by humanity. Likewise, economic laws are constant throughout society, but it takes observations from people to draw these theories out from the interactions of others. Economic laws are inherent to the universe; they are de facto a priori synthetic. The laws of demand are known to be constant and everywhere existent, much like the laws of the positive sciences. It does not take transactions amongst people for the laws of economic to become evident, notably the first law of demand can be seen in biology, chemistry, and physics.

For instance, the law of demand has been seen throughout the biological systems as animals have evolved to display certain traits. The male peacock, for example, has a wonderful plume of tail feathers for which he uses to attract mates. The larger his plume, the more attractive he becomes but at a price: he is more visible to predators. This form of tradeoff is seen throughout the animal kingdom, but there is a correlation with increased expression and increased vulnerability to predators. As can be easily identified, there are more animals with nominal characteristics within any given population and increasingly less as phenotype characteristics become more flamboyant. The quantity of phenotypes that make an animal attractive to mates decreases as the resulting characteristics make the more easily seen by predators.

In the physical sciences, the law of diminishing returns can be seen through the processes of chemical reactions and limiting reagents. In the process of creating a fire, three factors are needed: heat, fuel, and oxygen; however, in a contained environment, an increase in any one of these could lead suboptimal reaction if the other factors are held ceteris paribus. If there is too much fuel for the fire to consume, then the oxygen in the environment becomes the limiting reagent: the reactant that is used up first in a chemical reaction and determines the amount of product that can be formed in a reaction. If the oxygen in the environment becomes too abundant, the fire will begin to burn faster. The chemical reaction may happen so quickly all the fuel becomes used and there is leftover oxygen. If the heat in this scenario becomes too high, the risk of changing the reaction from a fire to combustion increases. The law of diminishing returns is a priori to economic and societal systems.

Tilson, William. “Societal Actions as Outcomes of an Endogenous System: Economic Theory and Policy: Autonomous or Caused?” Working Paper, 2019.

Author: Deric Tilson

I am a classically-trained economist and doctoral student at George Mason. I'm an ecopragmatist and interested in the cross-section where economics, ecology, and ethology meet. I hope to work for non-for-profits specializing in economic development and eventually moving to either the public sector or a think tank. My research interests include the political economy of war, resource economics, the applications of complexity theory, the mitigation of risk by impoverished individuals, and global water scarcity.

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