Mastering Opportunity Cost: From Economics to Life Lessons for Better Decision-Making
Not-so-spoilt for Choice!
Here’s a sentence you already have or will definitely hear in the future from your economics teacher:
“Opportunity Cost is the Opportunity Lost”
In more comprehensive terms, this means that whatever choice we make, comes at the price of the other choices available to us. Suppose you go to the market with 100 rupees to buy newly-launched chocolate. At the shop, you realize that you can either buy 10 candies worth five-rupees each or buy one chocolate with the same 100 rupees. If you choose to buy the candies, then the chocolate is your opportunity cost and vice versa. Remember, your opportunity cost is basically the next best option that you sacrifice in order to make a choice. Even though this concept is fundamental in the study of Economics, it also plays an interesting role in Life-o-nomics!
Decision-making is one of the hardest things to do and yet we end up doing it almost every day. It happens so quickly that we forget to weigh in all the pros and cons before making a choice and the end result sometimes may not be what we desire. To prevent you from getting into such a sticky situation, we will show you how an academic concept can turn into a lesson for life:
- Identify your Type
We live in a world where one is spoilt for choices. You go to a supermarket and you find that there are a plethora of options at your disposal. Here, two things can happen. Either the options help will help you make an informed choice as you will know precisely what you need. Or, this will simply confuse you. So the first step is to figure out your ‘type’ before you start choosing and keep in mind that in both cases, it will ultimately boil down to narrowing your options.
- List your options
The first step to calculate the opportunity cost is to list out all your options. Now when we say list, it means thoroughly research and analyse your options and then put them together. For instance, in the current month, you might have to choose from watching your favourite film, going out with friends and finishing your syllabus. You prioritize and choose from the three options.
- The Greater Good
Now that you know your options, you must figure out which one will satisfy your need the most and give you the desired result. To watch the film, you have to forego going out with friends and finishing the syllabus. This would surely make you a lot happier if you were idle in your vacations. But knowing tight exam schedules that tie us up, we hope that our opportunity cost would be the film and the party!
- Time and Opportunity
Remember that what you are choosing is a shortlist of things that you like. All of them provide with varying degrees of satisfaction and you enjoy each of it at a different rate. It is a win-win situation if you take into account the dynamics of time and opportunity. Imagine that you’re craving for mangoes. It is your favourite fruit and you know it will uplift your mood in no time. However, it is peak winters and even if you manage to lay your hands it, the satisfaction you derive from it will not meet your expectations. In this case, you have to give it up for something that is available and is within your resources.
- External Factors
As much as you would hate to admit it, we all know that our choices aren’t our own in its entirety. We are influenced by people and circumstances around us in situations like these:
- Science, Commerce or Arts?
This million-dollar question pops up right after class 10th. It is one of the toughest decisions to make as a student and also the one that is often made as per parents’ choice. They aspire to see you at an IIT or become a doctor but you may not necessarily wish so. The trick is to persuade and convince them enough so that they are assured that you will excel in the field of your choice.
- ‘You’re not fit for this’ or so THEY say
The only place we feel this is applicable is perhaps the armed forces. Don’t let anyone tell you that you are not fit for something. It is extremely common for friends or teachers or your peers to tell someone that he/she is not ‘cut-out’ for certain job or task. The truth is no one is a born perfectionist. Some people may have an edge over others but there is nothing that cannot be mastered by the virtue of hard work.
- All that Glitters is not Gold:
Remember how everyone wanted to be Shaktimaan at one point of time, just because they were enamoured by his super-hero abilities. Well, a portrayal of someone or something does have the capacity to ignite your passion but make sure you are firmly based on the grounds of reality.
Winspire Recommends: ‘The Art of Choosing’ by Sheena Iyengar’
The author is an S.T Lee professor of Business and Management at the Columbia Business School. She is also visually challenged and this has not deterred her spirit to inspire others. In the book, Iyengar analyses the various factors that play a major role in influencing our choice of decision. She looks at aspects such as culture and upbringing that shape our choices. With various economic, social and psychological layers, Iyengar also shows how one can master the art of decision making.
What makes The Art of Choosing stand out from other self-help books is the fact that it is interactive and loaded with anecdotes. This makes the entire reading experience very relatable and innately motivating.
The choice is more than picking ‘x’ over ‘y.’ It is a responsibility to separate the meaningful and the uplifting from the trivial and the disheartening. It is the only tool we have that enables us to go from who we are today to who we want to be tomorrow.
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