You're forgetting about the utility function. If you had a billion dollars, there's no reason for you to care about the return of your investments at all, much less about microscopic improvements. On the other hand, if you're retired and you're living on the income from, say, a $100,000 portfolio, any additional percent that you can eke out is meaningful to you.
The real question is why do you consider the market portfolio (which, again, most of US residents understand as an S&P500-based index) to be the default?
For historical context, it certainly wasn't the default for saving money for retirement, say, 50 years ago.
If you had a billion dollars, there's no reason for you to care about the return of your investments at all, much less about microscopic improvements.
I don't agree -- if you have $1 billion, the marginal utility of an additional dollar is smaller than if you are normal individual investor, but the utility is still positive. More importantly, the second derivative of utility -- the rate at which the marginal of utility diminishes -- is much larger for an individual investor than for a billionaire. $10 million is about twice as good as $5 million for Bi...
P/S/A: There are single sentences which can create life-changing amounts of difference.