Why not allocate your budget based on expected marginal utility per dollar? This automatically accounts for diminishing returns, since such interventions will have diminishing marginal utility per dollar, and won’t be allocated the next dollar if there’s a better intervention. With this decision rule, you don’t need to worry about how big or small your investments are.
One problem with this approach: if there are transaction costs to identifying, evaluating, and funding interventions, then you would optimally ignore interventions that are below some scale. (And we can think of scalability as lack of diminishing returns.)
Why not allocate your budget based on expected marginal utility per dollar? This automatically accounts for diminishing returns, since such interventions will have diminishing marginal utility per dollar, and won’t be allocated the next dollar if there’s a better intervention. With this decision rule, you don’t need to worry about how big or small your investments are.
One problem with this approach: if there are transaction costs to identifying, evaluating, and funding interventions, then you would optimally ignore interventions that are below some scale. (And we can think of scalability as lack of diminishing returns.)