Everyday we make decisions. And those decisions reflect how much we value our time and money. In a larger sense these decisions are ultimately building blocks for the future real estate of our life and career.
That’s why Opportunity Cost should not just be measured in business. It should be measured in our entire lives holistically. Opportunity Cost is the value of the next-best alternative when a decision is made; it’s what is given up. $100 going out to eat is a $100 not invested in a high interest savings account.
However, not all Opportunity Cost decisions are black and white. If the $100 for dinner is with a mentor that can help increase your professional value and network, or with someone we’re building a significant personal relationship with, then the opportunity missed to invest for monetary gain was given up for something of equal or greater value.
In the case for spending $600 million on a Canadian election (2 years after the last one) during a pandemic, only to have little change in the results? Well, most would say that Opportunity Cost is pretty black and white. $600 million could have been better spent.
Author Todd Henry sums it up best: “Each choice you make to do something is a choice not to do something. You can have anything you want, but you can’t have everything you want.”