The Austrian conception of marginal utility differs from that of mainstream economics.

Steven Horwitz is Economics Editor at Lib​er​tar​i​an​ism​.org and Distinguished Professor of Free Enterprise at Ball State University. Horwitz has written extensively on Austrian economics, Hayekian political economy, monetary theory and history, and macroeconomics.

Summary:

The Austrian conception of marginal utility differs from that of mainstream economics. Whereas the mainstream explains diminishing marginal utility in terms of changes in one’s psychological state–the declining pleasure brought by additional units of a good–the Austrian explanation is not psychological but formal. For Austrians, a good’s utility is connected to our perception of its ability to help us achieve the ends we value, and diminishing marginal utility is a consequence of the fact that we apply additional units of a good toward achieving ends we value less.