Opportunity costs – it`s all about giving up
Economists are widely known for overcomplicating things. I wouldn`t argue with that statement, but through my eyes I could see people oversimplifying it. Economics is all about expanding your notion of the ordinary, seeking the hiden side of things around us, and enthusiastically look for the reasons we do the things we do.
One of the concepts that better reflects the idea of seeking the hiden side of things is the opportunity cost. The cost of something is everything you have to give up in order to obtain it.
In this way, the cost of a Polo T-shirt isn`t US$85.00, but all the other things you could have bought with the same US$85.00. This means a possible other 2 or 3 t-shirts of another brand, a date at a restaurant you could have taken your partner, an installment of your car`s insurance, a new pair of pants, a week worth of groceries, etc.
When we look at the simple monetary value of things, we tend to be narrow-minded and short-sighted about our own decisions. An hour of TV means an hour you are never spending sleeping, eating, studying, working, plaing with your kids, listening to music, going on a date, etc. Basically, everytime you choose something, you are not only deciding what to do, but also everything you are not to do in its place.
When we look at things this way, it allows us to better understand what we are doing, and suddenly giving up doesn`t seem so bad, as long you are giving up for something worth obtaining.
What have you giving up today?