The Law of Diminishing Returns

The simple way of thinking about the law of diminishing returns is what happens when you reach the point where the effort you’re putting in is no longer worth what you’re getting out.

Sometimes in life you just keep going, grinding way beyond that point, and you need to stop and ask yourself an honest question: when is enough actually enough? Getting to the point of diminishing return is a good problem to have. Most people never get there, not because they don’t know when to stop, but because they never put in enough effort to get started in the first place.

If you’re looking for maximum gain with zero effort, the law of diminishing returns will never trouble you, and you’re not getting anywhere near the point where it matters.

The Pareto Problem

There’s a principle known as the Pareto Principle: the idea that a small proportion of causes drives most of the results, roughly 80% of outcomes from 20% of effort. The economist Vilfredo Pareto originally observed the pattern in land ownership; it was the quality management consultant Joseph Juran who later named it in Pareto’s honour and turned it into the practical rule of thumb we use today.

To be honest though, in my experience over the last twenty years most people aren’t even putting in the 20% of effort. They fall short of the point of diminishing return not because they’ve pushed too far, but because they haven’t pushed at all.

Whether it’s 80/20, 70/30, or 60/40 doesn’t really matter. What matters is identifying where most of your effort needs to go for maximum effect, and actually putting it there before you start worrying about optimisation. The point of diminishing return only becomes relevant once you’ve done the high-impact work that earns you the right to worry about marginal gains.

Let me give you an example from my practice. I’ve had patients who survived a heart attack, left hospital, and gone back to smoking within weeks. The statistics on this are stark: around six in ten people start smoking again within the first year, and many restart within the first month of leaving hospital. I’ve lost count of the number of times a patient in exactly that position has proudly told me they’ve started eating more fruit, while still smoking a pack a day.

Improving your diet after a heart attack matters, but it’s a marginal step next to stopping smoking, and getting the sequencing right is everything. Stop smoking first. That’s the 80%.

Everything else is noise until that’s addressed. I see this pattern everywhere: people focusing on the marginal stuff while ignoring the fundamental. The expensive supplements alongside a 20-a-day habit. The fitness tracker worn while living on takeaways. Optimising the wrong things with genuine effort whilst the big wins sit there untouched.

Putting Effort in the Wrong Places

Most people don’t do what they need to do, most waste effort on what they don’t really need to do, and they procrastinate away their quality of life. They lie to themselves by doing things where the return on effort is minimal, because those things are easier, more comfortable, and feel productive without requiring them to confront anything difficult.

It’s why people reorganise their desk instead of making the difficult phone call. Why they research productivity systems instead of actually putting them into practice. Why they read books about success instead of attempting the thing they’re afraid of attempting. It feels like progress. It isn’t progress. It’s sophisticated procrastination with good branding.

Think about it from a life perspective. If you’re working 60-hour weeks but your relationships are falling apart, you’ve passed the point of diminishing return — if your relationship matters, you need to work less. If you’re spending three hours a day on social media but can’t find 20 minutes to exercise, your effort allocation is completely wrong. The law of diminishing returns applies to your life, your health, your business, and your future success.

Getting Your Priorities Straight

The point of diminishing return is only worth thinking about once you’ve identified your 20%, the critical actions that will deliver most of your results, and you’ve actually done them. You can’t fine-tune an engine that isn’t running. You can’t build on foundations that aren’t in place.

Here’s what you need to do. Stop and identify your high-impact activities. For most people this is obvious once they actually sit still and think about it honestly. The habit they know needs to change needs to change. The conversation they’ve been avoiding for months needs to happen. The health issue they keep pushing to next week needs to be addressed today. The relationship that needs attention needs attention. These aren’t hard priorities to identify, you already know what they are, you’re just not addressing them.

Do those things first, put your real effort there, get your foundation solid before you start worrying about the other stuff.

Only once you’ve done that, only once you’re actually getting meaningful returns from your effort, does it make sense to ask whether the extra hour at the gym is worth it, or whether you need to track your water intake to the nearest millilitre.

Most People Never Get There

If you’re getting nothing out, the honest answer for the vast majority is that you’re either not putting enough in, or you’re putting your effort in the wrong places.

Only the select few operating at genuinely world-class level need to worry about squeezing the last percentage point out of marginal gains. Most people are nowhere near that problem. Most people need to stop kidding themselves that they’ve hit the point of diminishing return, when the truth is they’ve never found their 20% and committed to it properly.

The law of diminishing returns will take care of itself once you’ve actually done the work that matters. Until then, it’s not your problem. Getting started is your problem.

Find your 20%. Do it first. Do it properly. Everything else can wait.

Further reading

• Koch, R. (1998). The 80/20 Principle. Currency.
• Clear, J. (2018). Atomic Habits. Avery.
• Newport, C. (2016). Deep Work. Grand Central Publishing.
• McKeown, G. (2014). Essentialism. Crown Business.
• Duhigg, C. (2012). The Power of Habit. Random House.