That makes a lot of sense to me. Aversion to small losses makes a ton of sense as a blanket rule, when the gamble is: lose: don’t eat today win: eat double today don’t play: eat today
Our ancestors probably faced this gamble since long before humans were even humans. Under those stable conditions, a heuristic accounting for scale would have been needlessly expensive.
In short, the author is wrong. Diminishing marginal utility only really applies when the stakes are on the order of the agent’s total wealth, whereas the loss aversion asymmetry holds true for relatively small sums.