Why We Do Too Much: Failing to Consider Opportunity Cost

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Many of us pride ourselves on being resourceful and self-sufficient. Tackling tasks ourselves—whether preparing a home-cooked meal or taking on a complex work project—often feels rewarding. However, we may fail to account for an essential factor when deciding whether to do something ourselves or delegate it: the opportunity cost of our time.

Opportunity cost is the value of what you give up when choosing one option over another. It means considering how the time spent on a task could be used elsewhere. While the concept seems straightforward, research shows that we tend to neglect opportunity costs when making decisions.

Opportunity Cost Neglect

Frederick et al. (2009) coined the term “opportunity cost neglect” to describe the finding that people often fail to compare the option they are considering with alternative uses of their resources, especially time. When people are reminded of things they are giving up, they often end up making different choices. For example, participants were asked about their willingness to purchase vacations and flat-screen TVs. Those reminded of alternative uses for the money made different (often more affordable) choices than those who were not given these reminders.

Interestingly, this is not a case of failing to invest enough thought into the matter. Even in conditions that promoted cognitive effort, it was necessary to provide specific cues about alternative choices in order to get people to think about the opportunity cost.

One reason for this is that opportunity costs are not as tangible or immediate as direct costs. For instance, while you might notice the $200 saved by assembling furniture yourself, it’s harder to quantify the value of the four hours you spent doing it instead of working or relaxing.

Recognizing the hidden costs of time also affects decisions beyond consumer purchases. For example, research from Whillans et al. (2017) finds that people who spend money to save time report higher levels of life satisfaction. Delegating isn’t about laziness; it’s about valuing your time appropriately and using it wisely.

Opportunity Cost and Delegation

For leaders, delegation involves transferring decision-making authority to subordinates for specific tasks or domains. Because leaders oversee the operations of teams and organizations, they are constantly having to decide what to delegate and what to work on themselves.

Failing to consider opportunity cost is especially important in this context because leaders’ decisions affect not only them but also the employees under them. Time is short, and any task a leader does not delegate eats away at other tasks that could be done. Priority should be given to strategic tasks that affect the long-term projects of the team or the long-term value of the business. If a leader neglects to take opportunity cost into account, he or she may fail to address long-term goals, and this may end up hurting the team as a whole.

Leana (1987) studied predictors of the preference for delegating tasks to workplace subordinates. She finds that managers are more likely to delegate decisions to subordinates whom they trust and find capable. In addition, a high workload also naturally leads managers to delegate more. In contrast, managers are less likely to delegate to others decisions they perceive as important.

These factors are understandable, but none of them touches on opportunity cost. It is, of course, better to delegate to a capable employee, and it is perhaps inevitable to delegate when one is overworked, but one of the key criteria for delegation should be the relative cost and value that one’s time has.

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By reframing how we view time and opportunity costs, we can make more intentional choices that maximize productivity and satisfaction. A simple exercise might be to take a pad of paper and split it into two parts. Write down time-consuming work you have done in the past week on one side, and write down what you believe the opportunity cost for each piece of work on the other side. Do the two align?

If the opportunity cost is low, then it is the right decision to do these tasks yourself. If not, then reconsidering delegation when possible might be appropriate. The true cost of your decision isn’t just what it takes—it’s also what it takes away.