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Opportunity Cost: Social Science's Biggest Idea Ever

And the reason you’re more anxious than a rock, a creek, or a computer.

No gain without pain, they say, but of course that doesn’t mean that all pain leads to gain. You take comfort knowing that some people waste their entire lives following out stupid ideas that will never pay out no matter how much painful effort they make—the clueless competitor, the idiot fundamentalist whose steadfast assumptions aren’t even wrong.

Still, you also wonder sometimes if maybe you’re like them, barking up the wrong tree, exerting yourself for naught, pain that won’t bring gain.

You take into consideration what you can, and all things considered you think you’ve picked the best path. Still, you can’t consider everything. For all you know there’s some factor you’re ignoring that could change everything. You’ve been wrong before and you see others make mistakes all around you by not factoring in the right factors, the folks who marry people who, by some fatal flaw, turn out to be disastrous partners, the entrepreneurs who pour their life savings into ventures only to discover they overlooked something crucial. No wonder you’re anxious sometimes. Maybe you’re missing something too. So you keep your peripheral vision alert to anything you could be missing . Still since you can’t consider everything, no matter what you consider there’s always that chance that something your missing changes everything.

If it’s any comfort you are not alone with that anxiety. It’s not just the story of your life but of life itself. No gain without pain including the pain of guessing where to invest our pains for gain’s sake, always with alternative paths looming nearby in sight or out, casting a shadow of doubts on the bets we place on where to invest ourselves.

Life progresses by trial and error. You are a trial and for all you know, you might turn out to be an error. You run the race neck and neck with other trials, the winners TBD, to be determined.

T’was ever thus with all organisms and all of life’s lineages these 3.6 billion years that life has oozed and roamed earth. Your ancestors all the way back were winners enough that you’re here today, but that’s no guarantee you’re destined to win. And wouldn’t it be a tragedy if for all their winning over all these millennia you turned up a loser, end of the line, nothing to show for your effort? The competition at our heels as we strain forward, we crane sideways knowing they’re there, representing the possibility that if we tried something else, we’d have a better chance of outpacing them or at least keeping up.

In economics we talk about that something else as the opportunity cost, the cost you pay the sacrifice you make for doing what you do instead of something else, the opportunity missed by investing yourself as you have.

Opportunity costs apply to all our guesses about what to do, both big and small.

You’re reading this now. Now what would you be doing if you weren’t reading it? Sleeping? Moving on to another article? Watching TV? Getting to your to do list? Talking to your partner? Whichever is the most alluring option from the ones on your radar, that’s your opportunity cost for reading this.

And if your opportunity costs get too high—too much sacrifice—you’ll jump tracks, switch channels, move on. It makes an author anxious knowing readers can leave just like that.

You’re in your partnership, but what would you do if you weren’t? Contact the person you’ve always wanted to date? Live single and get more work done? Again those are your opportunity costs and if they get too high, you’ll jump tracks, switch channels, move on. It makes a partner anxious, knowing mates can leave just like that.

Whatever you want, no matter how selfish or selfless, even if you want to just stop wanting so much, you’re going to have preferred pathways, ways to be and interact that you intuit, compared to known and unknown alternatives, will bring you closer to your heart’s desires.

We humans can give voice to our desires and intuitions in ways other organisms can’t, but they have desires and intuitions too, even if they’re entirely unconscious.

Bacteria want to survive. We know it by the pains they go to for the potential gain of longevity. They work hard to keep on keeping on. All of their functional adaptations are, in effect intuitions about bets worth making to survive.

You can rationalize your course of action, but other organisms are rational too, with options weighed, this path compared to other paths. Rational—meaning a ratio, this opportunity compared to the other paths not taken, the opportunity costs of being here instead of there. Evolution is survival of the fittest intuitions and always by comparison, what we’re doing vs. what else we could be doing.

Rocks, creeks and other inanimate things have neither desires nor intuitions about how best to achieve them. Rocks roll downhill and water flows downstream always by the shortest path, but they exert no work to do so. Gravity does all the work.

They just go with the flow in ways we might envy, desiring as we do to find the shortest, easiest path, the one that positions us so the world does the work for us. We dream of finding the path that just works, the path that once discovered makes success as easy as rolling downhill, destiny and fate doing all the work to get us where we want to go.

But then that’s a desire that would never occur to a rock or a creek, and given that desire, we strain our intuitions to reach that heart’s desire.

Scientists are on an extraordinarily promising path to getting us all closer to our heart’s desires. Still, there’s one big tree they’re barking up that I’ll wager will prove wrong in the long run.

At present most scientists are still trying to demonstrate how all behavior, living and non-living, micro and macro follows from simple physiochemical or mechanical cause and effect. They say, “You may rationalize your paths but really you’re just a product of things bumping into each other, this bump causing that effect. Your mind is mere mechanism, chemicals bumping into each other in such a way that give you the impression you have desires, intuitions, reasons and chosen paths. Face it, you’re just a computer, all switching caused in predictable ways by prior switching.”

I’ll wager scientist will soon have to concede that there’s a big difference between how living and non-living beings behave. Living beings still operate within the cause and effect laws of physiochemical mechanism, things bumping into each other and changing them in predictable ways, a one to one correspondence between each cause and each effect. But with life a new kind of behavior is also operative, the ability to sense and respond in ways that keep us keeping on, sensing and responding.

Living things notice differences and behave differently in response to the differences, and not like computer switches that get bumped and switched, or neural chemicals that trigger each other. Computers and chemicals have no skin in the game. We living things do. From the bacterium on up to us, we all do active work to keep on keeping on.

Our ability to keep switching, responding to differences in our environment is dependent on what we sense and how we respond. Mere physical cause and effect has none of that. The computer’s “life” doesn’t depend on it choosing well. We are not just wet computers; we’re evolving beings, evolving not just by not getting wiped out, but by trying to find the right paths from among alternative options.

We love working with computers and other inanimate objects in large part because they’re reliable. Your computer doesn’t experience the opportunity cost of its dedication to your tasks. It’s not going to say, “wait, this guy is a waste of my time. I’ve got something better to do,” and abandon you like an unreliable partner might. It’ll take whatever you serve it.

But we love other living beings too, each of whom is weighing its options, and therefore is more unreliable than inanimate objects. Your beloved cat can leave for someone who feeds her better. Your customers can jump ship for a competitor.

Life's unpredictability can cascade, tumble and avalanche in unpredictable ways. Bacteria can jump rail to a new host and take your partner's life. People en mass can lose their senses electing a dictator who ruins everything for decades. A cluster of cranky customers frustrated over their own losses can give your business terrible Yelp reviews bringing your business below sustainability. It’s enough to make any of us anxious.

Our awareness of opportunity costs is the freedom to try to upgrade, the freedom in free will, willed desires met freely by alternative means. But given that all living things have that freedom to some degree, opportunity costs are also the reason you might feel anxious.

People especially. We’re not as reliable as inanimate stuff governed by mere physiochemical mechanism. With opportunity costs comes free will and its opposite, anxious unpredictability, which is why our debates from the internal to the grand poltiical are over the tension between freedom and safety, the opportunity to move freely from path to path and the insecurity we cause each other when we do.

More from Jeremy E. Sherman Ph.D.
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