Saturday, July 10, 2010

Opportunity cost and agency

I learned in Economics 101 about the concept of opportunity cost. In general, economists define the "opportunity cost" of any good or service as the value of all the other goods or services that must be given up in order to produce that good or service – a cost that can be unimaginably great.

I saw a much broader application of the concept (as, I am sure, have countless others). I applied it to many things in my life: use of money, choices in the use of time, the gospel. My children got very tired of hearing something like: “You can do that if you want to, but what else are you giving up if you choose to do it?” It got shortened to: “What’s the opportunity cost?” But they didn’t like that much better either. The funny thing is that I have heard them say the same thing to their children from time to time.

Sometimes, the result of the choice we make is not as enjoyable or noteworthy as we might have hoped. Sometimes, in hindsight, it proves to be exactly the wrong choice. In a paper, Sidney L. Jones describes the relationship between a choice selected and a choice rejected.
Economic Policy: National, Institutional, and Individual Issues by Sidney L. Jones, BYU Studies, vol. 11 (1970-1971), Number 1 - Autumn 1970 26.)
An understanding of marginal results also enables us to appreciate the opportunity costs associated with decisions. A commitment to one course of action necessarily creates a loss of marginal benefits from the alternative that is rejected. The decision to attend a baseball game precludes working in the yard, returning to the office, reading, community work, etc. The decision is the correct one only if the expected benefit exceeds the opportunity cost of the lost alternative. This concept is obviously important in making decisions about education, family finances, travel, recreation, church and community service, and the balance of job and personal interests.
Evaluation of the opportunity cost can often only be made after some time has passed – in retrospect. The prodigal son certainly thought he had made the right choice for some period of time. But as his inheritance was used up in riotous living and was finally gone, he found that his erstwhile friends had gone too:
And he would fain have filled his belly with the husks which the swine did eat; and no man gave unto him. (Luke 15:16)
In a devotional address given at Brigham Young University on 10 November 1998 called The Quest for Excellence, President Gordon B. Hinckley said:
“I heard one of my Brethren tell of a recent visit he made to the prison. There he noticed a young man, handsome in appearance and intelligent in his ways.
My brother said to the prison official, "What is that young man doing in here?"
The reply was that one evening he had taken his mother's car, had obtained some beer and drunk it, and then, out of control of himself, he drove the car down the sidewalk and killed two girls.
I do not know how long he will be in prison, but I do know that he will never get over his feelings concerning the act that put him there. On such small hinges turn the gates of our lives. Little mistakes, that seem so unimportant in their beginnings, determine the eternal courses we follow.
Had there not been that car and that beer, he would be in school, a bright and happy young man, moving forward on the way of a productive life. Now he sits in misery for nobody knows how long, musing, thinking, repenting of the terrible thing he has done which has blighted his life.“
What opportunity cost represents in terms of Church doctrine is the basic concept of agency. When we choose one path, we often lose the freedom to choose another. Joseph F. Smith, in his book, Collected Discourses, 4:410–11, said:
“Brethren and sisters, let us be free. I contend—and I think I have a right to do so—that I am a free man, in accordance with my observance of the commandments of God. If I do wrong, I am in bondage to that wrong. If I commit sin, I am in bondage to that sin. If I transgress the laws of God, I am responsible before the Lord. But I contend that as to liberty, as to freedom of speech, freedom of will, freedom of action—as to everything that goes to make a free man in the midst of men, I do not believe there is another man on earth any freer than I am. Bless your soul, I can commit sin if I want to. I have as much liberty to commit sin as any man. No man has any right to commit sin; but all men have the liberty to do so if they will. God has given to them their agency. Is there any manhood displayed in my committing sin because I have liberty to do so? I have liberty to go to a saloon and drink liquor, if I choose, or go to a gambling [hall] and gamble. I possess just as much liberty in regard to these matters as any man living on earth. But the moment I should do such a thing as this I become a slave and a bondsman to iniquity. On the other hand, if I am not guilty of visiting saloons, or of playing cards, or of gambling, or of other crimes I am innocent of them and so far I am a free man. The truth has made me free in regard to this.”
For every choice, right or wrong, there are consequences. As President Smith teaches us, right choices give us true and eternal freedom. Wrong choices enslave us. Wrong choices cause detours from our eternal goals. The Savior has “marked the path and led the way, and every point defined to light and life and endless day, where God’s full presence shines” (Eliza R. Snow, How Great the Wisdom and the Love). A quote from Robert L. Millet’s book, An Eye Single to the Glory of God: Reflections on the Cost of Discipleship, page 79, is enlightening about this concept:
“Thus all of us, to some degree, have taken brief detours from the gospel path, detours that cost us time and opportunity. Christ our Lord leads us back to the path and beckons us to hold more tightly to the rod of iron, to take fewer and fewer excursions from the path, and to rid ourselves of those curiosities with the carnal which can corrupt. He calls us to navigate the narrow passageway to life eternal with caution and care and to seek for that inner stability that fortifies us against the roller-coaster existence so typical of those who are wafted about by the whims of the world.”
The path may be narrow, but it is not unknown. The “stern impassioned stress” (America the Beautiful, Katherine Lee Bates) of the feet of the many who have passed before us make the path hard-packed and easy to follow. The adversary and his minions would make it as difficult as possible to see the path with enticements both blatant and subtle, enticements that are inviting and alluring.

Seeing the path involves the difficult process of seeing through the fog of worldliness and sin that clouds our eyes daily. Following the path involves, at times, not just holding, but white-knuckled gripping of the rod. It involves constant prayer, constant pondering of the blessings of eternity, and constant concern for those around us who are also on or near the path. The costs of eternal opportunities lost are unimaginably great.

Stick with it. If you slip, don’t give up, get up! Keep going. The rewards of eternity, also unimaginably great to our finite minds, are nevertheless awaiting our eventual success.

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