It says something about us, I think, that so many respondents seek the
origins of diminishing marginal utility in what they call "formal" papers,
with mathematics, yet! Surely such a commonsense observation pre-existed
properly stylized exposition.  Dan Bernoulli, Jules DuPuit and Hermann-Henri
Gossen were brilliant and insightful writers, I thoroughly agree, but not
mainly because they expounded commonsense in pedantic forms. On the
contrary, to imprison thought in mandatory templates may prevent one from
exploring the matter further.

Thus, the collage of ancient Jewish folk-tales called Exodus contains the
deep insight that God rained manna on his famished people in the wilderness,
but made it spoil quickly, so provident or greedy people would not take more
than their immediate needs. This tells us that the rate at which marginal
utility diminishes varies with the durability of the objects. If they are
potential "stores of value", like gold or land, greed may know no bounds.
Thus Virgil refers in the Aeneid to "auri sacra fames", the accursed lust
for gold, a lust with no limits. Jewish Prophets like Amos and Isaiah railed
against those who "lay field to field, until there be no place, that they
may be alone in the midst of the earth". Wm. Randolph Hearst surrounded his
San Simeon with 62,000 acres of prime coastal lands. Ted Turner ... one
could go on.

Gossen and DuPuit both wrote about land values, but did they explore this
important aspect of diminishing marginal utility, or were they imprisoned in
their mandatory pedantry so they could not "formalize" what they could
observe? That is not a rhetorical question - if anyone knows the answer,
please let us know! Veblen is a shining example of someone who could think
outside the box (as well as inside it) and put formal modeling in its proper
perspective in the great scheme of things. See his Absentee Ownership.

Mason Gaffney