We often fail to consider opportunity costs from "summary" of Predictably Irrational, Revised by Dan Ariely
Consider a scenario where you are faced with a decision about how to spend your evening. You have two options: you can either stay in and catch up on work, or you can go out with friends for dinner. Many people might weigh the immediate costs and benefits of each option - the work that needs to be done versus the enjoyment of socializing with friends. However, what often gets overlooked in this decision-making process is the concept of opportunity cost. Opportunity cost refers to the potential benefits that are lost when one alternative is chosen over another. In the example above, the opportunity cost of going out with friends is the work that could have been completed if you had stayed in instead. By choosing to go out, you are essentially giving up the opportunity to be productive and get ahead on your tasks. This concept of opportunity cost is not just relevant to individual decisions about how to spend our time, but also applies to larger-scale choices that involve allocating resources. For instance, when a government decides to invest in a new infrastructure project, they are forgoing the opportunity to use those funds for other purposes, such as education or healthcare. Failing to consider opportunity costs can lead to suboptimal decision-making and missed opportunities. It is important to take a step back and think about what we are giving up when we choose one option over another. By being more mindful of opportunity costs, we can make more informed and rational decisions that take into account the full range of potential benefits and drawbacks associated with each choice.
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