Law of Diminishing Returns, is it applicable?

H

hopjohn

Full Audioholic
Early this month Eric Hetherington wrote an article about the law of diminishing returns on Goodsound.com, a site I frequent.

View it here. Goodsound Article

Here was my response to the article.
Eric Hetherington.

I think you are applyifng this law improperly, and in the process unknowingly slapping yourself and Goodsound in the face. You argue that there is a lack of a necessary constant in order to use this law because "it is impossible to determine an objective measurement of the pleasure derived from listening to music that is applicable to the whole population". First, I will let you know that I entirely agree with you on the matter of anything being applicable to the entire population, but would argue that this statement is strikingly similar to the very thing your site attempts to do in the first place. You use the equiptment (listen to the music), and then gauge the experience (make an objective? measurement) from the pleasure you've derived ( various opinions written in your reviews). So basically what you're saying, is that all of the reviews that you provide are worthless since "the population" all have different ideas about what sounds good to them in the first place.

Let's assume for some reason that you do not believe that your quote above is in line with the very definition of a typical review on this site. If for some reason the two things were not synonymus, then that would mean that you CAN indeed objectively review say a CD player, which would then in turm allow us to use that as the elusive constant that you claimed to be missing before. How so?...I'll explain.

I feel from the things I've read in forums that the law iof diminishing returns is being applied by different means than the ones you chose to use. We know that a cd player's basic functionality remains constant, and we know that spending more will often provide more features, and that spending less will often provide less. Thus, the law of diminishing returns can be applied in this way. Once a common feature set across the vast majority of all CD players has been determined, we would objectively (again I don't know that this can be done, but this is exactly what you and all the stereo mags attempt to do) rate the performance of each CD player. Then, we would systematically add points to the performance for players with features beyond the common feature set and subtract from the performance for those with fewer. Let's call this result the yield, in order to remain consistent with your previous example. Finally we would divide the yield by the cost which in my example we will label labor, again to remain consistent

Here's and example, which uses the same principles as the law of diminishing returns, as provided in your example.

( Performance out of a possible 1000 +/- Feature points @ 50pts per feature outside the common set ) = Yield, Cost of CD player = Labor

Yield / Labor = Value (Higher the value, the better)

CD PLAYER 1 ( 750 - 250) / 110 = 4.55

CD PLAYER 2 (880 - 0) / 165 = 5.33

CD PLAYER 3 (940 + 300) / 385 = 3.22

While you may or may not agree with what I've pointed out above, I think it is pretty clear that your article is a contradiction to what the site is trying to help people do, and that is to find the best bang for the buck in HT components. The actual law of diminishing returns might or might not be applied appropriately in the numerous forums across the web, but irredgardless there is truth to the idea that people are trying to get across. That truth, is that spending more doesn't necessarily mean you get more, and that spending too much is a really bad idea. Particularly for someone who is budget conscious, and forgive me if I'm wrong, but I thought that was the audience that Goodsound was shooting for.


Anyway, that was my take on it, let me know what you guys think about it.
 
M

miklorsmith

Full Audioholic
Interesting thoughts. I think that a single, numerical score would oversimplify individualities of a component. The idea of making sound objective is admirable, and some sites (Goodsound is one I believe) score items on a number of performance criteria. Condensing these into a single, numerical score would inherently score cheaper players higher. Generally, every $1,000 spent on a component generally produces lesser gains than the previous $1,000, so the numerator will be relatively flat, while the denominator will grow with more expensive gear, reducing the ratings.

For my buying habits, I figure out how much money I have to spend, then find the best piece I can for that $$. Reading reviews is more insightful for my purposes than attempting a rating system.

Further, while each increase in cost may produce lesser returns than the last, the point at which each listener (buyer) stops the madness is related to their own financial and obsessive limitations/needs. Each reviewer is also an individual who may prefer tubes and vinyl. A rock fan would prefer big solid state watts and CD's.

We wouldn't replace the standard review format I'm sure. Trying to make these inherently subjective assessments objective is difficult enough, but condensing all the thought that goes into single, numerical score would be nearly impossible. The figure spit out by any formula would not give any impression of the sound of the kit.

A "value index" addition to a review would be kind of nice to have I guess, but I think too many people would rely too heavily on it and could be misguided by high-scoring pieces that didn't meet their needs. Or, I suppose they could just be branded "stupid" for not knowing enough for their own good.

Americans are big fans of convenience though - I think they'd just flip to the back page "cliff notes" and be done with it.
 
P

Pat D

Audioholic
hopjohn said:
Early this month Eric Hetherington wrote an article about the law of diminishing returns on Goodsound.com, a site I frequent.

View it here. Goodsound Article

Here was my response to the article.
Eric Hetherington.

I think you are applyifng this law improperly, and in the process unknowingly slapping yourself and Goodsound in the face. You argue that there is a lack of a necessary constant in order to use this law because "it is impossible to determine an objective measurement of the pleasure derived from listening to music that is applicable to the whole population". First, I will let you know that I entirely agree with you on the matter of anything being applicable to the entire population, but would argue that this statement is strikingly similar to the very thing your site attempts to do in the first place. You use the equiptment (listen to the music), and then gauge the experience (make an objective? measurement) from the pleasure you've derived ( various opinions written in your reviews). So basically what you're saying, is that all of the reviews that you provide are worthless since "the population" all have different ideas about what sounds good to them in the first place.

Let's assume for some reason that you do not believe that your quote above is in line with the very definition of a typical review on this site. If for some reason the two things were not synonymus, then that would mean that you CAN indeed objectively review say a CD player, which would then in turm allow us to use that as the elusive constant that you claimed to be missing before. How so?...I'll explain.

I feel from the things I've read in forums that the law iof diminishing returns is being applied by different means than the ones you chose to use. We know that a cd player's basic functionality remains constant, and we know that spending more will often provide more features, and that spending less will often provide less. Thus, the law of diminishing returns can be applied in this way. Once a common feature set across the vast majority of all CD players has been determined, we would objectively (again I don't know that this can be done, but this is exactly what you and all the stereo mags attempt to do) rate the performance of each CD player. Then, we would systematically add points to the performance for players with features beyond the common feature set and subtract from the performance for those with fewer. Let's call this result the yield, in order to remain consistent with your previous example. Finally we would divide the yield by the cost which in my example we will label labor, again to remain consistent

Here's and example, which uses the same principles as the law of diminishing returns, as provided in your example.

( Performance out of a possible 1000 +/- Feature points @ 50pts per feature outside the common set ) = Yield, Cost of CD player = Labor

Yield / Labor = Value (Higher the value, the better)

CD PLAYER 1 ( 750 - 250) / 110 = 4.55

CD PLAYER 2 (880 - 0) / 165 = 5.33

CD PLAYER 3 (940 + 300) / 385 = 3.22

While you may or may not agree with what I've pointed out above, I think it is pretty clear that your article is a contradiction to what the site is trying to help people do, and that is to find the best bang for the buck in HT components. The actual law of diminishing returns might or might not be applied appropriately in the numerous forums across the web, but irredgardless there is truth to the idea that people are trying to get across. That truth, is that spending more doesn't necessarily mean you get more, and that spending too much is a really bad idea. Particularly for someone who is budget conscious, and forgive me if I'm wrong, but I thought that was the audience that Goodsound was shooting for.


Anyway, that was my take on it, let me know what you guys think about it.
A single numerical rating presupposes that everybody has the same criteria for what is of value. There are a number of things about CDPs that can be determined objectively and some of them can even be evaluated objectively. There are things that can make an audible difference. Lots of CDPs have a flat frequency response, low noise, low distortion, a maximum output somewhere near the standard of 2 volts, and low output impedance. Low output impedance, you say? Yes, this is to make it compatible with a wide range of other equipment.

Now, you talk about a $100 CDP, and there seem to be some inexpensive CDPs that sound as accurate as much more expensive one. Some CDPs do sound different--one I remember was a Carver model which had a button which would modify the frequency response--and these are the ones which are less accurate! But a number of controlled double blind tests have been done which showed the listening panel could not identify the CDPs tested from the sound.

CDPs vary in tracking ability and this is apparently more difficult to assess, although there are test discs like the Pierre Verany test discs which I have. However, I still have two or three discs that won't track on my machine (which does very well on the test disc), even though my old machine (which did OK on the test disc) would track them. On the other hand, I have a couple of CDs that had water damage that look like nothing would track them--no silver left on large areas--and my current machine has no difficulty at all with them.

Resistance to impact is another thing difficult to assess. But as long as the thing doesn't mistrack in normal use, what difference does it make to the consumer? I suppose for disco use this might be important, and it certainly is for Walkman type players.

Reliability is another value that is more difficult to assess in advance, although one can try to estimate the build quality. What good does it do me to find out 5 years down the road that a CDP has a good/poor repair record? I'm already stuck with it! As for features, how many things does one do with a CDP? What ever happened to indexing?

Now there are less tangible things. For example, a CDP with exceptionally low noise and distortion, a super power supply, etc. Well, these probably will not make an audible difference, but I sort of like to have them. Some overkill is not necessarily a bad thing and I feel a certain pride of ownership. The styling may be important, and not everyone has the same taste. Then of course, there is the prestige factor. For example, I love the Quad ESL-63 speakers, but they don't work so well in our house. So, when the power supply in one blew, I looked for forward radiating speakers. The PSB Stratus Minis sounded about as good as anything I could even think of affording, and frankly, they are more accurate than the Quads. More recordings sound good on them than even on the Quads. But they DO lack the prestige! Ah well . . .

Of course, nowadays, with multiple formats, one would look for a universal player, perhaps. Indeed, DVD players will play CDs and DVD-As, if desired, and some will even do SACDs as well. And DVD players do a host of things that most CDPs will not!

OK, there are objective measurements for things like CDPs, DVD players, preamplifiers, amplifiers, speaker cables (these can be found right on this site!), and interconnects. Many complain that such meaurements don't give them any reasons to choose one over another (this is the existential angst factor, I suppose!). Usually, the assumption is that different ones will sound different, and many find it almost impossible to accept that many don't sound different if operated within their design limits. Well, if the measurements give no reason to expect an audible difference, that seems to me to be a useful thing, but they don't.
 
A

av_phile

Senior Audioholic
This law of diminishing returns seems to apply to most any commericially traded merchandise on earth - one of those so-called immutable laws in economics, second only to the supply and demand law.

But I think the notion of diminishing returns is a personal one. That is often a function of personal value judgement and finances. Some people don't mind spending another $10,000 just to hear those faint triangle bells better on one speaker brand. Others would as they don't consider such incremental improvements commensurate to the cost.

And we sometimes buy things for reasons other than their intrinsic utilitarian value. Like the build is more robust, black is preferred, it fits the decor, the aesthetics better, the warranty is longer, the boss will be pleased, the neighbors will be impressed, etc. While there may be little or no sonic improvement between a $1,000 speaker and a $10,000 speaker, some people value pride of ownership, heirloom qualities, social status and bragging rights to increase commensurately with SRPs, and promptly get the most expensive they can buy. Nothing to do with sonics. The law of diminishing returns may apply to the utilitarian aspect, but there is perceived appreciating returns elsewhere. Just my thoughts.
 
H

hopjohn

Full Audioholic
I agree with many of your points av_phile. I do believe in large part the law applies in various ways depending on an individuals preferences. I do think we can generalize though for the sake of discussion, when we talk about a group of people simply looking for perfomance to price, that they might give little to no regard to the other circumstances you've pointed out. Maybe that group of people doesn't really exist, but it's a hypothetical anyway.

The primary point I was trying to make with this guy, and his article, was the blatant amount of irony. The entire article is in large part a contradiction to both the idea that people go to GoodSound looking for highly rated, value based products, and also that they go there for a meaningful opinion. While not saying this directly in the article, he basically argues against both of these concepts, rendering the whole article laughable in the face of what the site is attempting to accomplish.
 

plhart

Audioholic
The Audioholics % of Importance Spread Sheet

Gene, Clint and myself are working on an spreadsheet format which will assign a recommended percentage-value that equipment, the room, system ease-of-use and the partner acceptance factor (PAF) should meet to obtain a sytem that performs obtimally for a given price point. There will be a separate sheet for video with some components obviously overlaping into both. Stay tuned.........
 
H

hopjohn

Full Audioholic
Wow!, mad science at work. :) I look forward to seeing what you guys come up with. I'm sure it will be very thorough. Too bad for the people that think that the reviews are too long and complex as it is.
 

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