Opportunity Cost
In business school at Auburn University over 30 years ago I learned a few principles of business that still remain with me today. One principle is that there will always be unlimited wants and the limited ability to acquire or satisfy those wants. That reality leads to supply and demand and thus market pricing, etc. It also means that people will always want or need more or better food, clothing, homes, goods but that most of us will not be able to attain most of what we desire.
Another principle of business was the rule of ‘opportunity cost’. Simply, it means that when we make a choice; we incur the cost of all the lost opportunity from the choices we did not make. In business, if we choose to make bread and spend our limited capital to buy the flour, oven and other ingredients and tools to make bread; then we must sell bread. We have forfeited the ability to produce guns or butter or lumber. So, we better become good and successful bread makers!
These business principles have shown me other things in life as their application affects every facet of human existence. The ravaging of our planet in our collective quest for oil, timber, alloys, water and food is the relationship of unlimited human need and want versus the limited carrying capacity of the world’s resources. If we choose not to learn a skill or profession then we must take the most menial of work to survive; the opportunity cost is that we have lost the market skills to ever live beyond survival.
The opportunity costs in life can be very severe, and many times we must make those major life choices when we are very young. We choose schools or spouses and professions. We choose to play and not study. We choose to lavish our lusts instead of learning discipline and delayed gratification.
At 51 years of age I still make choices. But my choices today are more carefully made. I know the opportunity costs are larger today because my time left on this planet is more limited, and my chance to recover from a bad choice is minimal.
I have made a few really good choices in life and have little regret from the lost opportunity from them. But I have made some really poor choices and lost much time and resource and can only pray that God will make some good of my own poor choices.
When we think about life’s choices as the potential loss of all other opportunity, then we become more spiritual and more discerning about everything we do. We also come to rely on faith, prayer and mentors in making our choices.
How we choose to spend our time is the most poignant of all choices. Its opportunity cost becomes permanent loss; we can never recover elapsed time.
Make good choices this week, from how you spend your time to what you choose to read and watch. Don’t needlessly spend money. Choose to exercise and eat well instead of impulsively watching and eating junk. Fast and pray one day instead of seeking pleasure.
Choose to seek God and friendships and choose to love and forgive. Choosing hatred and revenge or jealousy will ultimately cost us true happiness in life.
So choose wisely today. Life is short, precious and a finite gift.