Thursday, September 6, 2012

How to lose weight the Everyday Economist way.

Good morning all. Yesterday I came across an article suggesting that the Mayor of New York, Mayor Bloomberg, will introduce a law which will ban serving soft drinks in large glasses in restaurants. I traveled to the US and more specifically to New York this past summer and I can attest that indeed the size of the glasses that soft drinks are served in restaurants is getting bigger by the year. This got me thinking about the implications on what we call in economics "the law of diminishing marginal utility".

Diminishing marginal utility can be explained using any consumable product but for the sake of consistency I will use the example of soda. Suppose that on a warm sunny summer day you find yourself walking in your favorite town on a busy street with lots of restaurants and bars. You decide have lunch at a restaurant of your liking and you order a glass of soda. Once the soda arrives you drink it almost immediately because you are extremely thirsty. You enjoy the glass of soda so much that you then proceed to order another glass.
 
 The second glass provides some enjoyment but not as much as the first, because you have already quenched your thirst with the first glass and you also start wondering whether you will have any room left for lunch. Ordering a third glass of soda is out of the question because this would cause you great discomfort.

What do we learn from this? The first glass of soda gives the highest additional utility or enjoyment. The second provides less additional enjoyment and the third will cause you stomach ache.

How is this law of diminishing marginal returns affected by the SIZE of the glass of soda? If the marginal utility or enjoyment stays the same for each additional glass, no matter its size, then we have an explanation for the obesity problem that so many people around the world face. I too, caught myself consuming larger quantities of soda when visiting the US because of the glass size.

Given the argument above, decreasing the size of the soda glass and extending the same principle to the size of meals that people eat, can have a positive effect on losing weight and healthier living.

Have a nice small meal day.

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