The Hidden Cost of Everyday Choices

The cost of choices we don’t make, when carefully weighed against the chosen option, is worthwhile if the decision is made consciously.

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An opportunity cost is what you give up when you choose one thing over another.

In many cases, the calculation is simple, and the stakes are low. You might, for example, pick a chocolate milkshake over vanilla. Even if you made this choice every time, it wouldn’t meaningfully shape the course of your life. You are simply trading one immediate pleasure for another. One of these paths doesn’t set you on any particular trajectory—you can always reverse your choice next time.

Weighing the Options

Economists use the idea of opportunity costs to help individuals and groups decide between complex alternatives. The opportunity cost of funding one project, let’s say planting 1,000 trees, is the value of the next best project that you now can’t fund—maybe building a community garden.