Economics is often thought of as a boring subject, and we'll grant you that it's not as exciting as tabloids covering stories like that of Tiger Woods. But with the U.S. Open underway at Pebble Beach, we thought we'd throw a little spice on consumer preference theory by giving you the economist's view on claims that Eldrick is a sex addict. Using some simple tools, we'll show that the greatest golfer of our generation is not a flesh addict, just another individual guilty of infidelity.
Consumer Preference Theory
In a nutshell, within the broad subject of economics is something known as consumer preference theory that is used to explain how consumers go about making choices among competing alternatives. Each of us has limited means and unlimited wants, and economists seek to understand how we allocate our scarce resources in maximizing our happiness. Of course, economists could never use such a simple word as 'happiness', they instead use the word 'utility' to describe how much satisfaction we receive from a particular course of action.
Diminishing Marginal Utility
One of the core principles of consumer preference theory is that of diminishing marginal utility. The easiest way to understand this is through a basic example. We all need to eat, and let's say that our food of choice today is pizza. When we're hungry, the first slice of pizza makes us feel less hungry. The second, a little less, and so on until our hunger is satiated. However, with each successive slice that we eat, our satisfaction gained from each slice of pizza is reduced until at some point we are worse off by eating the next slice.
This is the principle of diminishing marginal utility. While we may be hungry and in the mood for pizza, there is a limit to how much we can eat and still feel better after doing so. Eating too much pizza makes us miserable, but eating just the right amount (the optimal choice) is very satisfying. Graphically, we can show diminishing marginal utility as follows:
The example above is for someone that isn't addicted to pizza. But what about a meth addict? In their world, there simply is never a point at which more meth is a bad thing. The meth addict that is jones-ing for the next high will be initially relieved to get that first hit. However, this is just the beginning, as the addict continues to get higher and higher. There is no stopping point; there is no diminishing marginal utility. For comparison purposes, an addicts utility increases with each successive fix as shown here:
In looking at Tiger's situation, would it appear that he is an addict or not? We would contend that it is less likely that he is an addict and more likely that he is just a man that made some mistakes. Had he been a true to life addict, he would never be satisfied and likely would have hundreds, if not thousands of people coming out of the woodwork instead of the dozen or two that have surfaced thus far. While economics can be boring, it's principles, theories, and laws can be applied in many ways - even to claims of sex addiction.
NOTE: We make no judgments on Tiger Woods' choices, and are merely exploring the subject of economics through the headlines from the last several months. Any diagnosis of addiction is better left to those in the field of psychology.