4min chapter

Time and Attention cover image

71: Tradeoffs

Time and Attention

CHAPTER

What Is Opportunity Cost?

An opportunity cost is what we give up in return for doing what we do, or making the decisions that we make. It's a good way of thinking about all the hidden costs of doing something beyond just the price tag. If i want to go o movie, for example, i'm going to pay 15 dollars for that ticket, but it's also going to cost me two hours of time. So out a movie cost? No, i think so. I feel like we always buyer with seam points, so i haven't paid for a movie n forever. But really, ike, the opportunity cost is not just what you could have spent that other 15 dollars with, which could be

00:00
Speaker 2
They're so fun to make.
Speaker 1
O if i really want to eat some macarones, that means i maybe like foregoing the opportunity to eat something really healthy. But if i'm instead skipping eating sugary foods, this will help me void dibedes or something in the future. Some that i forego the fun treat right now, but maybe i'll be healthier a long term. And this is very similar to things
Speaker 2
macarones are made from almond flower. And what's healthier than an almond?
Speaker 1
An almond without a pound of sugar, two pounds of butter? No. So there's thatall but and thenhi. These kinds of trade ups, though, they come up not just in like your decisions around health and eating, it also comes into play like relationships. So whether or not you stay in an unhappy relationship, just because you've spent years and years of time with somebody, if they're no longer it'ss no longer like a healthy relationship, there's a trade off there. And same thing with work, is, if you're spending time or resources on projects, maybe they aren't, your choosing not to work on other projects that might have better value, or might have better pay offs for your career. So these are the kinds of trade offs you see in your daily life. But this also boils down how you make minute by minute decisions about how you allocate your time and your day. And a really simple way of doing this is by thinking about the opportunity cost of anything that you do. So do you know what an opportunity cost is? Oh, ok,
Speaker 2
all right. Now now is my test. You have been talking about opportunity cost over the ten years of our relationship. And i have honestly just talked about this. I haven't really read the notes for this episode of the pocast causee ah, because i wanted to be surprised. Opportunity cost is what we give up in return for doing what we do, or making the decisions that we make. How would you rate, how would you wrate that? Out of ten? I think
Speaker 1
i'd give you ligan, nine at ia, eight at a tenb im, feel really generous when i grade lately, so probably at nine out of ten. But i mean, really, what an oper people think about opportunity costs all the time without even realizing that's what they're doing. And so when people think about whether or not they want to do something, they kind of implicitly think about what they're foregoing to do that, right? If you're choosing to work an extra hour at work, you might realize, oh, this means i'm going to have one less hour with my new baby at home, or one less hour to go to the gim your you are consciously making those trade offs. But i think thinking about opportunity costs in a more structured way, and like really intentionally thinking about all the things you're giving up because that's what an opportunity cost is. It's really what you're giving up. It's what you're giving up. It's a good way of thinking about all the hidden costs of doing something beyond just the price tag. So if i want to go o movie, for example, i'm going to pay 15 dollars for that ticket, but it's also going to cost me two hours of time. So out
Speaker 2
a movie cost? No, i
Speaker 1
think so. I feel like we always buyer with seam points, so i haven't paid for a movie n forever. But really, ike, the opportunity cost is not just what you could have spent that other 15 dollars with, which could be investing it in the future. It could be buying another book instead. But
Speaker 2
it's all jun your chickens, sure?
Speaker 1
I mean, as pary, 15 junior chickens. Oh, yes. I don't know what things af, mac donalds, got wit 11 or 12? I haven't got no mac donalds in a while, so we can order mac donalds to night. I'm good. O, kanks a, but so in addition to the actual, ike direct cost of what you are choosing to spend in that movie, you're also spending two hours of time, and maybe three, if you have to go there and stuff. So i mean, that time is something you could have been spending working, where you are earning more income. But you could also be spending it doing something like going to the gym, or something else that you that has value to you. And so your opportunity cost is whatever. The most valuable thing that isn't what you're doing are the time.

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