Lizards, laundry, and life
Why everyone should study economics except the person you marry.
Opportunity cost is a huge filter in life. If you’ve got two suitors who are really eager to have you and one is way the hell better than the other, you do not have to spend much time with the other.
- Legendary investor Charlie Munger
In the first ten minutes of my first class in college we learned about opportunity cost. It was an elegant idea, both simple and deep.
But I soon filed it along with trigonometry, Sartre, and the finer points of the collapse of Rome under “Ideas that would have no bearing on my life whatsoever.” How wrong I would be.
Opportunity cost is the idea is that, faced with two options, you give up the benefit of option B when you commit to option A. If you buy the F-150, you get that really cool desk that folds out of the center console. But you lose that ingenious tailgate step that’s only on the GMC. Opportunity cost. Simple. But important.
The rational man understands opportunity cost. The irrational man (and lizards) do not. They encounter stimuli and react, unthinking and without hesitation.
Not unlike young humans.
My family was watching fireworks last night in uncustomary harmony. Everyone had a comfortable seat, we had some patriotic tunes going. My 8-year-old son had his shirt off. Apparently that was sufficient stimulus for his older brother to pick up a downed branch from a nearby maple tree and, unthinking and without hesitation, whip the unsuspecting lad across his back in the manner of a Singapore jailer. Ugly.
Being an occasionally rational man, I weighed my options. I could chase him into the house but I’d miss the fireworks grand finale. My opportunity cost was high. His opportunity cost, in contrast, was low. The joy of thrashing his brother far overwhelmed the joy of domestic tranquility.
You might confuse the idea of opportunity cost with the idea of consequences. But it’s more subtle than that. Let me illustrate with another example. My wife married me and had six kids. The consequences she bears are never-ending laundry and ingratitude. But her opportunity cost was a rich life full of freedom and romance. What I guess I’m trying to say is that my wife is an irrational man.
