Lots of things have increasing marginal utility at some hypothetical margin. But very few things have increasing marginal utility at the margin on which they are utilised, precisely because if people notice that increasing marginal utility, they will increase their consumption, until they hit a new point on the utility curve where the marginal utility is no longer increasing.
For example, shminux, above, talks about education. We can well imagine that education has steeply increasing marginal utility at some levels; once you have made the investment in learning to read, using that knowledge to learn some more things is very cheap compared to the benefits. But people are already aware of this, and so have already acted to do far more than just learn some basics, to the extent that, at the margin, educational consumption appears to be a costly signaling race.
Lots of things have increasing marginal utility at some hypothetical margin. But very few things have increasing marginal utility at the margin on which they are utilised, precisely because if people notice that increasing marginal utility, they will increase their consumption, until they hit a new point on the utility curve where the marginal utility is no longer increasing.
For example, shminux, above, talks about education. We can well imagine that education has steeply increasing marginal utility at some levels; once you have made the investment in learning to read, using that knowledge to learn some more things is very cheap compared to the benefits. But people are already aware of this, and so have already acted to do far more than just learn some basics, to the extent that, at the margin, educational consumption appears to be a costly signaling race.