Opportunity Cost, Part 1
January 2, 2012
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.