Opportunity Costs

Below is an excerpt of what 'Opportunity Cost' means:

Opportunity cost is the value of the next best alternative forgone as the result of making a decision.

The next best thing that a person can engage in is referred to as the opportunity cost of doing the best thing and ignoring the next best thing to be done.

Opportunity cost is a key concept in economics because it implies the choice between desirable, yet mutually exclusive results. It has been described as expressing "the basic relationship between scarcity and choice." The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently.Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, swag, pleasure or any other benefit that provides utility should also be considered opportunity costs.

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There's a saying that goes something like "The more you learn about something, the less you know about it".

The concept of 'opportunity cost' is not something totally unintelligible to the layperson. Although, I must admit, it may not be a common term that you may be accustomed to, you definitely would have lived it out in practice.

Here's my take on 'opportunity cost':

Opportunity cost is...

Leaving Penang for hopes of a better education and environment but also leaving the comfort of the warm weather, friends and family back home.

Living off-campus and forgoing a "wholesome" college life but being able to pay cheaper rental rates and learning how to be my own chef.

Taking up the position of Chairman at the OCF here and stretching myself for His Kingdom's sake but that also means that I'll have less leisure and study time.

Coming to the Uni of Tasmania, having to pay cheaper tuition fees and being able to own a car here but that also means that I don't get the prestige and sense of achievement of studying at a huge, renowned University with a vibrant student life. But then again, my own academic and financial ability have sort of boxed me in, haven't they?

Having to go through 5 years of Law and Economics at uni with the hopes of securing a brighter future for my family and myself but at the same time having to put up with all the, at times, sickeningly torturous study and assignments at Uni.

To a lot of people here, I look like a Japanese, Korean or a certain Hongkie movie star (I'm not making this up) but am always asked stereotypical questions by the Whites like: "Which part of China are you from?" and "Wow..you can speak English???" ~ ok...I know this has nothing to do with 'opportunity cost'... but it just peeves me off when I get asked those questions.

Leading on from that point, opportunity cost to me is when I have a good command of the English language but at the same time not being as proficient in my own Chinese language, history and culture.

So, does learning about concepts like 'Opportunity cost' or 'the law of diminishing returns' really do help you in real life? Well, some may argue that learning about opportunity costs help you make better, and more informed decisions when faced with 2 mutually exclusive alternatives.

My view is that, given the circumstances in which I made a lot of my decisions in life, I did not have a fair go at deciding between the alternatives at hand. More than half of the examples I gave above are proof of that. Then again, one can easily say that there is always a choice. Life is all about making choices. You're where you are today, doing what you're doing because of a choice you made at some point of your life, whether or not you were aware of the fact that you were already making that life-altering choice.

I am where I am today - at some obscure uni, short and stubby, not knowing how to play the guitar - all because I decided not to study hard enough when I was in High School, not to do more jumping(does it really make you grow taller?) and exercise as much or put in the extra hours into learning how to play the guitar when I was 14. And, many a times, what's done is done and we cannot make right the wrongs that we've done.

So, is 'Opportunity Cost' really that useful a tool in my decision-making process? I will answer that question in the negative. My view is that instead of helping you make better decisions, it just makes you realise the costliness and the gravity of you actions or inactions, for that matter. Instead of guiding you in your decision-making, it leaves you with the greatest sense of rue and regret for not choosing the other alternative. Maybe that's why they call it opportunity "COST", and not "BENEFIT".