We learned it with “utils” from eating hamburgers. At the beginning you love the hamburgers, and as you continue eating them, you love them more and more with every bite. After a few hamburgers, you’re still loving them, but each bite makes you love them less and less (diminishing marginal returns). Then after a while, as you continue eating, you begin to hate hamburgers (diminishing returns).

By my second econ class (2006), diminishing marginal returns and diminishing returns had already been conflated. The professor was taught as if they were the same thing, but we were using an old textbook that defined them correctly, and I had to teach a large group of my confused colleagues what the terms really meant. I suspect if it had been a business class, the proper distinction would have been made. Production during diminishing marginal returns can be profitable. But I don’t think a business would want to operate under diminishing returns.

Arguing against further prison expansion is the principle of diminishing returns. That is, as noted above, if the most serious offenders are already in prison, then prison growth requires the criminal justice system to reach deeper into the pool of prison-eligible offenders, such that increases in incarceration are less and less cost-effective.

This isn’t diminishing returns; as long as the increases are less and less cost-effective, it’s diminishing marginal returns. Diminishing returns would be when so many people are incarcerated that there are hardly criminals left to throw in prison and most people being prosecuted are innocent.