Opportunity Cost, Part 1

January 2, 2012

At the Foot of a Patagonian Glacier

According to Wikipedia “Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen (that is foregone). It is the sacrifice related to the second best choice available to someone… who has picked among several mutually exclusive choices.”

Josh Kaufman in his Personal MBA approaches the concept through outlining what he thinks of as the Three Universal Currencies – resources (money), time, and flexibility. “When ever you invest time, energy, or resources, you’re implicitly choosing not to invest (them) in any other way. The value that would have been created by your next best alternative is the Opportunity Cost of that decision.

During this trip to Chile I have experience Santiago and a few of its citizens and two places in Patagonia, The Singular resort in Puerto Natales, and now The Cliffs, nestled along the Pacific coast near Puerto Montt. These are all very different cultures and ecosystems. Experiencing the pleasures, disappointments, and difficulties adds to my fund of knowledge of the world and its people. In addition to the obvious restorative effect of taking time off, experiencing novelty does something lovely to our brains, along with, or is this the same thing, broadening our perspective on the human condition. In a week or so I will return to my clinical work refreshed and with a different, slightly more developed mind. Even though I would have a hard time demonstrating the difference I know it to be real from previous experience.

By not taking these two weeks off and by not spending the considerable sum for the amazing quality of this trip I could have earned thousands of dollars practicing psychiatry. The opportunity cost of this vacation is the cost of the vacation per se plus that lost income. The cost/benefit analysis, as far as I am concerned, makes the opportunity cost of the vacation a tremendous value in its benefit to both me and my patients.

Both the sources referenced above make the point that assessing opportunity cost is an easily overlooked process. While working away in my usual routine I rarely feel burned out. For my whole career I have thought that I am one of the most fortunate men alive – I love my work and make a good living at it. But overly sustained activity of any sort dulls the mind. There is a cost to not taking time off. Let’s not forget to factor this cost into doing our business.

I would appreciate hearing your thoughts about this concept in the comment you leave.

0 Comments
  1. Strom Preisvergleich www.strom-abo.com February 16, 2012 Reply

    Hmm it appears like your blog ate my first comment (it was super long) so I guess I'll just sum it up what I had written and say, I'm thoroughly enjoying your blog. I as well am an aspiring blog blogger but I'm still new to everything. Do you have any suggestions for beginner blog writers? I'd certainly appreciate it.

    • William Lynch February 17, 2012 Reply

      Hello Strom,
      I try to keep my blog posts fairly short and informative.
      I have a schedule of publishing at least every other week.
      Weekly would be better but I have a busy clinical practice
      that drains my brain.
      So, short, informative, on topic, regularly published pieces...
      Thanks again for taking the trouble to leave a comment.
      Bill

  2. Robyne Lewis February 25, 2012 Reply

    Bravo! Traveling, learning new things, experiencing new ways, and making new connections is what enriches our capacities as wholistic human beings...
    In the refreshing/ re-energizing state we return to our more regular routines with new insights to our work and often have encounters with familiar people in new ways!
    Thanks for sharing.
    Robyne

    • William Lynch February 25, 2012 Reply

      Robyne,
      Thank you so much for reading the blog and taking the time and effort to leave your comment.
      Please use the "Tell a Friend" function on the website's home page to pass it on.
      Bill

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