NON-SATIATION

Today, I will explain the CHARACTERISTICS OF WELL-BEHAVED CONSUMER PREFERENCES. But first, let me begin with a definition of terms:

1. PREFERENCE –Wanting something over another. For example, if a monkey is given an apple and a banana, it will rather eat the banana than the apple. His preference is the banana. (Disclaimer: Preferences refer to HUMAN beings. However, since the human preference is very diverse, we’ll never have a universal answer to the apple or banana illustration. So, I just used monkeys.)
2. CONSUMER –the buyers in the market.
3. UTILITY –the level of happiness you get by consuming something. This is ordinal rather than cardinal, the ranking is given more importance than the numerical value. For example, if I were a monkey, bananas will give me more utility than apples.

According to economists, our preferences have a set of characteristics. If we are part of the norm, these characteristics will also apply to us. Another term for “following the norms” would be “well-behaved”, hence,

THE CHARACTERISTICS OF WELL-BEHAVED CONSUMER PREFERENCES. In this topic, we are dealing with a combination of two consumption goods (two things that we will buy and use). This serves as the general rules that we have to follow to create a combination that will make us the happiest (highest utility).

CONVEXITY. According to economists, we will be happier with a balanced combination. We will be more satisfied with having averages over extremes. There is a graphical explanation to this (meaning, dealing with highfaluting graphs which will be such a challenge to explain with a blog) that I will not attempt to tackle. You can learn that from your professor, while I will simply revert to my monkey analogy. So, if you were a monkey with a bowl of bugs and a bunch of bananas (you like eating both dishes), you wouldn’t want too much of one while having too little of the other. If you have just 1 banana and 9 bugs, you’ll get tired of eating bugs and you’ll be craving for more bananas (one isn’t enough to satisfy your banana hunger). Nor would you want to have 9 bananas and only 1 bug. In this case, you'd want to add more bugs and give up some bananas. Sooner or later, you’ll settle at the middle ground with 6 bananas and 4 bugs, for example.

NON-SATIATION. This means that more bananas and more bugs will give us a higher level of utility. In other words, MORE IS ALWAYS PREFFERED TO LESS. We’ll be happier with 9 bananas and 6 bugs as compared to having 6 bananas and 4 bugs. A higher quantity of both goods is always better. We want more and more and we are not satiated. I’m quite tempted to say that this is because we are greedy, but instead, probably this is because of our limitless capacity to hope for more. (HAHA!) There is no point of satiation, hence the term “non-satiation”.

With these concepts in mind, let me show you a question from our first ECO111 Long Test...

TRUE OR FALSE: The properties of consumer’s preferences do not allow a consumer to be completely satisfied.


Is it possible to be completely satisfied?
· To not want anything more
· To not have regrets that you wish to correct
· To be able to tell yourself that you cannot be happier nor more contented because you are already at the maximum
· To say that there’s nothing you can do anymore to improve your situation (because this is already the best)

If I get a 92 (which is an A) in an exam, I’ll be satisfied. A 96 would be better, but I’ll be satisfied with any score that will merit an A. However, I will want all my exams to merit an A. I won’t be contented if I get only one A. Aside from grades, I’d also long to be successful in all other aspects in life—social, business, love, family, everything!!! Once I’m okay in these fields, I’d still want more. After all,
“There is always room for improvement”.

Being part of the executive board of my organization, I am well-aware that goals serve as the direction towards which we move. We have recently been having numerous goal-setting sessions because this will serve as the foundation for all our activities this year. Stagnation is our enemy, improvement is our objective, and realization of a vision is our goal. When we finally fulfil our goals at the end of this year, it doesn’t mean that we do not need one for the coming school year. One fulfilled goal is always replaced by another. When will there come a time that a goal is no longer necessary? When will we be contented with status quo that there’s no need to yearn, hope, work for more?

Actually, are we even supposed to be satisfied? Shouldn't we constantly try to improve?
I think we shouldn't reach contentment, until the last few days in our life.:D
Contentment would make you not want more, therefore, not do more, and therefore not gain more... because you are already contented. Contentment would be not knowing what to do because you aren't really aiming for something and hence you don't have direction.(except if you're religious, you'd say that you're heading towards God, which, doesn't need you to need anything, so that's still contented)Contentment is for those who have done something. Contentment is for those who have achieved something. Contentment is for those who have already proven something.

Going back to the long test question at the start of this entry...
I answered FALSE and it turns out to be one of the three mistakes I committed in the exam.