The Law of Diminishing Returns states that as more investment in an area is made, overall return on that investment increases at a declining rate, assuming that all variables remain fixed. To continue to make an investment after a certain point is to receive a decreasing return on that input.

This law has broader applications than just in economics. For instance, a student considering one more hour of study after 2 AM, a farmer weighing adding an extra bushel of fertilizer to a saturated field of corn, or a marketer analyzing the ROI of additional media buys in a long-running campaign.

The ability to recognize the point of diminishing returns and cut off further activity from that point onwards can result in a huge benefits. These benefits can manifest in the form of increased productivity, fulfillment, happiness and vitality, depending on what area you are using it in.

If you are not conscious of the point of diminishing returns, you will fall into the trap of investing more input then your return is worth. That results in ineffective usage of your energy. This is something neurotic perfectionists are often guilty of. In trying to fulfill their satisfaction of having a ‘perfect’ or near perfect outcome, they jeopardize the bigger picture.

Summing-up: In everyday experience, this law is expressed as “the gain is not worth the pain.” Exercise your gut and become conscious of the diminishing point. This will be an extremely important skill to use as you optimize your days and maximize not just your productivity, but also your happiness level.