As we move through life we face various opportunity costs. With experience we become more aware of the choices and decisions that we make, but do we fully understand the concept of what an opportunity cost is?
Opportunity cost is broadly defined as “the loss of other alternatives when one alternative is chosen”. The cost element is the value of the most valuable choice out of those that were not taken. This opens up a rabbit hole as it asks us to place definitions on value…
What you find valuable is up to personal preference and doesn’t always equate to money. One of the biggest areas that it relates to is time.
If you have studied economics you may be familiar with the concept of an opportunity cost, but you may not have realised how this concept plays out in the bigger picture.
I follow a number of deep thinkers in the world – from reading their blogs to listening to their podcasts, we have a lot to learn from their experiences (made accessible thanks to the internet and digital age). In thinking about opportunity costs, I was drawn to four blogs that I have read on Seth Godin’s blog.
Opportunity cost – “Doing nothing is expensive”
Opportunity cost – “How much does it cost to go to a movie”
Challenge yourself to zone in on the opportunity costs when making decisions, it may help frame a longer-term view and lead you to make better decisions. Through evaluating things fully, we are more aware of the opportunity costs. Choices are made for different reasons in certain contexts, we won’t get them all right but we can learn from them regardless. Being conscious of why we chose one direction over another will strengthen our decision making as the journey progresses.
This week’s podcast recommendations
- Want better strategies? Become a bulletproof problem solver
- Episode 174 — Distracted at Facebook
- #101: The Oracle of Silicon Valley, Reid Hoffman (Plus: Michael McCullough)
2 interesting reads