Tuesday, July 12, 2011

Opportunity Cost: Economics & Poetics

" . . . the deciduous idea!
trees die for half the year and take all else in the universe . . . "
~ Lee Perron ~
Central Park, June 2011

If you haven't seen my latest Fortnightly blog post, No One With A Nose, take a look now and you can read one of my all - time favorite poems along with some economic theory that elucidates the main character's bargain with the gods:

sometimes he wonders if he really had to go out & cut off his
nose just to learn how to get things
maybe he could have just gone out and gotten them
but no, he looks around & sees that no one with a nose has
anywhere near the things he does, not a tenth so much,
not a hundredth
from Desire, a Sequence by Lee Perron
click to see entire poem posted earlier

I think perhaps rather than sacrifice, this poem may really be more about an idea that came to attention ~ coincidentally! ~ as I was turning the calendars ahead to July: opportunity cost, i.e., "the cost of any activity measured in terms of the best alternative forgone . . . the sacrifice related to the second best choice available to someone who has picked among several mutually exclusive choices . . . the basic relationship between scarcity and choice. The notion of opportunity cost plays a crucial part in ensuring that scarce resources [ ~ such as true love ~ ] are used efficiently. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure or any other benefit that provides utility should also be considered opportunity costs" (see Wikipedia for further explanation and footnotes).

An even better explanation is provided by the young entrepreneurs who designed the Indiana Council for Economic Education 2011 Economic Concept Calendar. The featured concept for July is "Opportunity Cost," illustrated by fifth grader, Abbie S.: "When you make a decision, the most valuable alternative you give up is your Opportunity Cost. (Opportunity Cost is NOT what you pay to buy something.) There is always an alternative to any decision, so every decision has an opportunity cost" (click ICEE, scroll down to page 7 for calendar contest winners; clicking on the winning pictures link will give you a preview of next year's 2012 calendar).

Another way to think of it is the passage from George Bernard Shaw's play Major Barbara (but also ascribed to novelist H. G. Wells; a discrepancy that I have not yet resolved to my satisfaction):http://www.blogger.com/img/blank.gif

"You have learned something.
That always feels at first
as if you have lost something
See also column at right ~>
"The Price of Experience" ~>

If there is a decision, an alternative, something to learn . . . then there will be a cost, something forgone, something to lose.


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