We teach that people make decisions comparing marginal benefit to marginal cost. We labor economists apply this to decisions about work, telling students to compare the return (the wage) to the opportunity cost (the value of non-market time).
This has been an extremely powerful tool, but it masks so many complexities. For example, how is it rational that I cook on weekdays, even though my hourly wage is higher than my wife’s (and I am a truly lousy cook)? The answer is that, as an academic, my time during the day is flexible, so the opportunity cost of my time can be viewed as low just before suppertime. As an attorney, my wife’s time is much less flexible, so her opportunity cost is higher.
I bet there are lots of cases in other areas where the proper measure of opportunity cost varies over time in surprising ways and leads consumers/producers to make apparently anomalous decisions.
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Aren’t you ignoring the value of a delicious meal over a lousy or mediocre one?
Don’t give up on yourself – I believe that anyone can cook, given the proper guidance and motivaiton. At the very least you could spend some of the money that is saved/earned while you are in the kitchen on cooking classes!
Interesting approach!
I’ve always wondered about the time frame of opportunity cost calculation.
I suspect that your opportunity cost isn’t calculated only in the hours immediately before suppertime, but includes a much larger calculation including more tasks (you cook during the week, she does the laundry?) over a longer time frame (if you don’t cook during the week, you’ll have to do all the cleaning on the weekend), and probably includes some additional calculation inputs around personal preferences (you *really* hate cleaning, especially on the weekend, so the amount of energy you’d have to spend to actually do that task makes it too costly compared to cooking).
I’m pretty sure this is an old lefty-ish argument however to which there’s already a reply…
Interesting stuff!
Keith
Perhaps neither of you should cook and go out instead! That’s silly though because there are non-financial reasons to cook, like to lose weight or because you like cooking.
One common fallacy about “opportunity cost” is not realizing that the surplus opportunity needs to actually exist. For your wife, presumably, she could bill more hours instead of cooking dinner, so a real opportunity for more income is present. Unless you have other incoming-producing work that is measured hourly, you are paid the same if you cook dinner or not, so it’s entirely rational for you to do so.
I’ve heard a lot of friends say things of the form, “Well, it’s rational for me to eat out rather than cook, since the cost of my time is $x/hour,” but if no one is actually offering them $x for that hour, that’s purely imaginary.
If you’d really organize your day following strict criteria of economic efficiency, neither you or your wife would ever cook, but you’d always eat out in restaurants.
An academic makes more than a lawyer?
And then there is the cost of currying favor with your wife
Christophe-
Exactly. This idea that your time is worth $X an hour because you earn that is useless. If no one is going to pay you for that time, that time’s value is without monetary value (but not without other value).
This is the kind of nonsense logic that makes economics work in books but not in real life.