We often think of cost simply in terms of dollars spent, but the real cost of a choice -- what economists call its "opportunity cost" -- consists of the forgone alternatives, of the things we could have had instead. For instance, the cost of seeing a movie is not just the dollars you plunked down for the ticket, but also the subtler cost of missing a dinner at home or a cocktail party at work. This idea sounds simple, but if applied consistently, it requires us to rethink and, yes, raise the costs of the Iraq war.
From the Weblog Award winning Simply Left Behind, Tuesday, November 13th:
But what's not talked about, the costs that aren't covered, are the opportunity costs.Happy to be of such assistance, Dr. Cowen!
When a business makes a decision regarding a major investment, one thing it takes into account is what else they could do with the resources they need to commit to that investment, how much money they have to subtract from other investments, and what those investments might yield instead.
These are called "opportunity costs." If the new investment produces a greater return, then the new investment is made. If it takes too much from other opportunities and doesn't produce enough, it is not made.
Think about the Iraq invasion in this regard: how many National Guardsmen would have been available for Katrina, or the recent rash of California wildfires? Would the I-35 bridge have collapsed and killed as many if the NTSB had been fully funded to even their 2000 levels? How many people have lost vital services because of budget cutbacks to pay for this debacle?
Just kidding. Dr. Cowen is a professor of economics at George Mason University.
The question is, what took him so fucking long to do this pitiful analysis, given his resources (I don't have a team of graduate students at my disposal, yet eevn I did a more thoroughly number crunch!)?
I grade you a B-, Needs improvement, Doc...
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