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Giving Gladly: Tradeoffs

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FRIDAY, MARCH 23, 2012 Tradeoffs Economists love to think about tradeoffs (or opportunity costs, as they call them). Any money we spend can't be spent on something else, so if I use $2.50 to buy a strawberry milkshake it means I'm not using that $2.50 to get the chocolate one or the mint chocolate chip one. That's pretty easy to think about. But it also means I'm not getting a bus fare, a light bulb, or anything else with that $2.50. And if I buy that strawberry milkshake, according to standard economics it means there's nothing else in the world I would rather buy with that money. I don't think we're usually that rational. For one thing, it's unpleasant to think about negatives. We like to think about what our money does get us, rather than the infinite variety of things it doesn't get. Also, there are so many alternatives that we can't really consider them all every time we spend money. I once saw a flippant proposal that we draw people's attention to this in a gruesome way by la

Giving Gladly: Tradeoffs Friday, March 23, 2012 Tradeoffs Economists love to think about tradeoffs (or opportunity costs, as they call them). Any money we spend can't be spent on something else, so if I use $2.50 to buy a strawberry milkshake it means I'm not using that $2.50 to get the chocolate one or the mint chocolate chip one. That's pretty easy to think about. But it also means I'm not getting a bus fare, a light bulb, or anything else with that $2.50. And if I buy that strawberry milkshake, according to standard economics it means there's nothing else in the world I would rather buy wit

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