One of the most fundamental concepts in microeconomics is that of utility. Utility typically refers to the satisfaction that a buyer derives from the purchase of a good or service. Total utility is often defined as the number of utility units that are obtained by a consumer from the consumption of a specified quantity of an activity, product or service over a given period. In general, the higher the total utility of a consumer, the greater the level of satisfaction he or she derives from using the product (Rittenberg and Tregarthen 168). Because it is impossible to quantify utility, economics assumes that it is possible to measure it. Holding all other factors constant, a consumer’s utility rises with the consumption of every extra unit of the product, service, or activity and the additional utility derived from consuming each unit is called marginal utility (Rittenberg and Tregarthen 168). However, this concept is only true up to a specified consumption level beyond which utility begins to reduce, a concept illustrated perfectly in Patrick Rishe’s article on the decline of NFL ratings.
In this article, which appears on the Forbes website, the primary issue in focus is the evident decline in NFL ratings in 2016, and the microeconomic principle of diminishing marginal utility may explain it. Throughout 2016, the NFL TV ratings witnessed a dramatic decline with Sports Illustrated reporting that programs such as Monday Night Football had recorded a 24% decline from the 2015 figures with Thursday night witnessing an 18% drop (Rishe). The drastic drop even prompted a discussion among industry players about whether or not the NFL should drop the experimental Thursday night program, which was widely condemned for being poor in quality and full of sub-par matches.
According to Rishe, there are several reasons that could potentially have contributed to the current state of affairs. He mentions some of these reasons as the blowback from the negative public relations occasioned by the furor over whether to stand in respect of the national anthem, the focus on the Trump-Clinton affairs, and the quality reduction arising from the reduction in the practice hours for NFL players (Rishe). Whereas all these reasons provide very plausible explanations for the dramatic drop in viewership numbers, Rishe opines that they are not the primary cause. Instead, he posits that the reason the NFL is experiencing a viewership problem is that it has begun to experience diminishing marginal utility and it is thus imperative for the concerned parties to act fast to address this issue.
In microeconomics, the concept of diminishing marginal utility has arguably one of the greatest applicability rates since it can explain changes in consumption for good, activities, and services across virtually any sector of the economy. The law of diminishing marginal utility as an economic concept posits that when a certain level of consumption is attained within a specified period, the marginal utility of any additional unit of the product, service or activity starts to decline (Rittenberg and Tregarthen 170). Consequently, the marginal utility curves for all goods and services eventually exhibit a downward sloping behavior. This concept explains why it is impossible, for example, to consume an infinite number of burgers since immediately one is satisfied, the body capacity has been attained and no more pleasure can be derived from consuming an additional burger.
Diminishing marginal utility thus provides a perfect explanation for the NFL viewership decline due to oversaturation of the market with NFL matches. The article points out that there are TV broadcasts of live NFL matches every Thursday, and Monday night as well as all throughout the day on Sunday followed by another show later the same day. The airing of the NFL on all these days leads to an oversaturation of content beyond what fans of the sport would want to consume (Rishe). A typical consumer can only enjoy watching only so much NFL and once he or she reaches this point, the content starts to become boring and viewership numbers decline. Once this diminishing marginal utility begins to set in, the consumer becomes reluctant to dedicate any additional time to watching the NFL, more so in the modern economy where time is money (Rishe). The reduced viewership then directly influences the program ratings thus explaining the significant decline. Hence, instead of having so many shows and consequently oversaturating the market, Rishe argues that the NFL should focus on the Red Zone channel, which would permit consumers to cram their viewership experience into a compact schedule thus retaining utility at optimum levels.
Conclusively, it is obvious that utility is a fundamentally important concept in microeconomics that explains the consumption of products, goods, and services. However, beyond a certain level, additional consumption offers less additional benefits, which is called the law of diminishing marginal utility. This concept provides an excellent explanation for the drastic drop in TV ratings witnessed by the NFL in 2016 as highlighted in Rishe’s article. The airing of the NFL on several different days has created an oversaturation in the market causing consumers to exhibit diminishing marginal utility.
Works Cited
Rishe, Patrick. "2016 NFL TV Ratings Decline: Has Diminishing Marginal Utility Finally Set In?" Forbes, 6 Dec. 2016, www.forbes.com/sites/prishe/2016/12/06/2016-nfl-tv-ratings-decline-has-diminishing-marginal-utility-finally-set-in/#17d3db9c5217.
Rittenberg, Libby, and Timothy D. Tregarthen. Principles of Microeconomics. Flat World Knowledge, 2009.
