I’m not one to collect inspirational slogans, but here’s one I like: “Judge the value of what you have by what you had to give up to get it.” Perhaps I took it more seriously because it was pinned to the corkboard of an inspirational friend; she always seemed to be off for another expedition to Mongolia or Patagonia.
But my fondness for the motto may reflect that it describes an under-appreciated idea in economics: that of opportunity cost. And I’ve come to realise that our collective failure to think rationally about opportunity costs can be used as a weapon against us.
The principle of an opportunity cost does not at first glance seem hard to understand. If you spend half an hour noodling around on Twitter, when you would otherwise have been reading a book, the lost book-reading time is the opportunity cost of the tweeting. If you decide to buy a fancy belt for £100 instead of a cheaper one for £20, the opportunity cost is the £80 shirt you could otherwise have bought.