Tuesday, April 15, 2014

Opportunity Costs

When I was going to apply to law school, I took a couple courses in Economics at a local community college.  I had never taken any as an undergrad, but I read somewhere that everyone who goes to law school should know something about economics.  I found it fascinating and wished in retrospect I'd taken Economics earlier, I even wished I had majored in it. 

One concept I learned in my basic Economics coursework was "opportunity cost."  It is defined differently in different settings but expresses the idea of the value of alternative choices in a given situation.  For example, if I choose to write for this blog, then I forgo spending time with my family, reading a good book, and giving my dogs a bath.  At this period in time, I've valued expressing myself in this blog over those other options.  The opportunity costs of posting to this blog are time with family, reading a book and bathing my dogs.  I've sacrificed those things to write on this blog today.

Life is full of opportunity costs.  We are constantly making decisions of how to use our time and other resources.  But we don't usually stop to consider that is what we are doing.  Typically, we are so caught up in the hectic-ness of life to realize what we are sacrificing when.  And many times we have no real option but to keep on doing what we are doing.  We have responsibilities--financial and otherwise--that restrict our options.

But sometimes we do have choices that we may not realize.  It can be hard to realize those choices because it would require thinking outside the box and making choices that others in our social circle don't make.  We humans are used to thinking in more traditional ways.  We are creatures of habit.  And it is very hard to go against the herd.  It takes vision and courage.

One reason I started this blog was to help others realize that they had choices and it might be possible to live a more fulfilling life.  Like most folks, I assumed that I'd spend the bulk of my life working frantically at a job until I was in my 60s.  But then I happened upon books about voluntary simplicity and in particular the book Your Money or Your Life by Joe Dominguez and Vikki Robin.  I began to see a different way of living that was more sustainable and more fulfilling.  I'd love for others to have similar epiphanies.

Right now I know people who are not living their best life because they are caught up in the materialism of modern American life.  They are trying to keep up with the Joneses.  They think they cannot live without certain "necessities."  They think they'd have to win the lotto to live their lives doing things they enjoy.  But that may not be the case.

I know women who would love to be stay-at-home moms instead of being away from their kids all day at a job they don't really care about. 

I know people who would like to adopt and provide a child in need a forever home.

I know people who would like to do mission work or work in the nonprofit sector.

I know people who don't mind working, but feel they are betraying their values by working in lucrative industries where the product or services may not provide social value or may create social harm.

I know people in these situations who feel stuck.  They'd rather do something else with their time and other resources, but feel like there is no other choice.  These are middle class professional people.  And to the extent that they want to continue their current spending and standard of living, they are right.  They are stuck in their current jobs--unless they are willing to make changes.

If eating out frequently or grabbing a latte on the way to work is the priority, they are stuck.

If annual vacations to luxury resorts is the priority, they are stuck.

If driving a gas guzzling vehicle is the priority, they are stuck.

If getting professional manicures or pedicures is the priority, they are stuck.

If having a smart phone for everyone in the family is the priority, they are stuck.

If buying fashionable clothes and accessories regularly is the priority, they are stuck.

If having cable TV is the priority, they are stuck.

If sending one's kid to drama camp or classes to earn a black belt are the priority, they are stuck.

If having seen all the Oscar nominated films prior to Oscar night is the priority, they are stuck.

If eating lots of meat and/or all organic produce is the priority, they are stuck.

If filling your home with junk and needing a larger home to store all the junk are priorities, they are stuck.

But note that eating out, grabbing a latte, vacations, gas guzzling vehicles, mani/pedis, smart phones, fashions, first-run movies, and a home filled with junk--these are costs you are choosing to pay if you'd rather do something else with your life.  Following your passion may be the opportunity cost to spending your money on such luxuries and needing to keep working to pay for such luxuries.

At least out here in the 'burbs, the things I listed above tend to be considered necessities by many.  They cannot conceive of a life without such things.  But if you haven't before, I encourage you to try to imagine life without them.  Ask yourself if these things are truly necessities or if you might live without them.  You may be surprised by the answer you come to.

No comments:

Post a Comment