Opportunity Cost

Every choice forecloses alternatives. The hour spent reading can’t also be spent exercising. The money spent on a car can’t also be spent on travel. The career in law means not pursuing medicine. The cost of anything is the value of whatever you gave up to get it. This is opportunity cost — the ghost of the path not taken.

Accountants track explicit costs: money spent, time logged, resources consumed. Economists insist on implicit costs too: what else could you have done with those resources? A business that makes $100K profit but could have made $150K elsewhere actually lost $50K in opportunity terms. The visible return hides an invisible loss.

Opportunity cost makes comparative advantage work. Even if you’re good at something, doing it may cost more than it gains — because you’re even better at something else. The question isn’t “can I do this well?” but “is this the best use of my scarcity?”

Time is the binding constraint. Money can be borrowed or earned; time only depletes. Every hour spent on one project is an hour not spent on others. The successful person isn’t doing more — they’re doing less, but choosing more carefully what to do. constraints force trade-offs; opportunity cost is the tool for making them wisely.

The concept is simple but the practice is hard. Opportunity costs are invisible — you don’t see the foregone alternative as clearly as the chosen path. Sunk costs are vivid; opportunity costs are abstract. We overweight what we’ve already invested and underweight what we’re giving up by continuing.

The discipline: before any major commitment, ask what you’re not doing. The cost of the new project isn’t just its budget — it’s everything else the team won’t build. The cost of the meeting isn’t just the hour — it’s the focused work that won’t happen. Seeing the invisible is the beginning of better choices.