All choices come with costs

It really would be helpful if people who used certain economic phrases grasped what those phrases meant. So it is with opportunity cost. It’s a vital economic concept, number two on our very short list of the two important things about economics. There are always opportunity costs, reality does not allow us to escape them. Assuming, and assuming only, that we have a choice, then there will be an opportunity cost. The only time there is not such a cost is when we have no choice. The man about to be hanged faces no opportunity costs, he’s got that 8 seconds after shaking Pierrepoint’s hand and that’s that. We can, possibly should, argue that the crime that led to this had opportunity costs but that’s rather like Bayesian probability which does collapse to one as events go past.

Which leads to this:

For as the Office of National Statistics puts it, delayed parenthood isn’t just about what it calls the “opportunity costs of childbearing”, or what is more popularly referred to as women putting their careers first. (Where do men put their careers, one wonders, for the whole of their 20s? Is the argument that they’re all secretly dying to change nappies, if only their girlfriends would just settle down?)

That’s not opportunity cost. But then this is The Guardian on matters economic, eh?

The opportunity cost of putting your career ahead of children is the not having of children. Assume a binary choice – not true but still illustrative – the opportunity cost of the one decision is not being able to do the other thing. The chop one’s willy off in order to become a woman in the modern terminology is a pretty binary thing. One does or one does not, one becomes a woman or one does not. The cost of not doing so is not becoming a woman, the cost of doing so is not remaining a man.

It is not that women putting their career first is an opportunity cost. It is that the decision to not have children in order to pursue said career comes with that opportunity cost, the not having of children.

OK, this is rather flogging a dying journal but it is an important distinction. For there are, whenever there are choices, such opportunity costs. Even if motherhood had no effect upon career that decision to have or not have children comes with opportunity costs. OK, we’ve already specified that it won’t be about career that is the cost but the not being in the wine bar while reading the bedtime story is a cost either way the decision goes. The reading of the story comes with the cost of not boozing it up, the boozing it up comes with the cost of no story.

Which is where the importance of the distinction is. Life involves opportunity costs. There’s no escaping them therefore we cannot moan about their existence. Knowing this explains something important about the society around us. We’ve a couple of commenters who repeatedly tell us that women were happier back with Kinder, Kuchen und Kirche. It’s entirely true that women’s self reported happiness was higher back then. The great wave of female liberation, of economic freedom, in the past couple of generations has led to womens’ self-reported happiness falling. It’s getting much closer to the levels seen in men in fact.

But this is not then to say, or not to say it accurately, that sending the women back into the kitchen, kindergarten or Kirk will make them happier. Choice has increased these decades, that means higher opportunity costs. It is possible to be an astronaut, train driver, CEO. Thus the cost of being the CEO has risen, as one cannot now be the train driver nor the astronaut. The cost of any one choice rises as the number of choices does, the price of any path increases as the number of roads not walked does.

Or as we might put it, one of the central insights of economics is that you can’t have it all. Further, as the number of choices in the all increases the higher the cost of any of them, thus the lesser the happiness at those outcomes not available.

Feminism is supposed to have made women unhappier, as it has done. Which is why that self-reported happiness is descending to male levels, to that of those who have always enjoyed such choices.

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12 COMMENTS

  1. The headline suggested a look at late childbirth opportunity cost versus early childbirth opportunity cost. Actually interested in whether getting one or two buns out of the oven early on is more or less costly.

    • That’s what I was hoping to learn, too. I have 50 year old women friends with kids still in grade school.

      My assumption is that establishing your career early, and having kids after 30 YO, will work better financially. Tim’s dissertation highlights not having kids at all.

      On the other hand, my 50 YO friends wish they were free to enjoy life more.

  2. But this is not then to say, or not to say it accurately, that sending the women back into the kitchen, kindergarten or Kirk will make them happier. Choice has increased these decades, that means higher opportunity costs.

    It may not follow but I say it is worth a try. Choice has increased and presumably that is one of the causes of female unhappiness. But choices for men have increased too. One of which is the choice to dump their frumpy middle aged wife and run off with a younger thing. It may not happen often but it does add to the insecurity in most people’s lives.

  3. SMFS

    But this is not then to say, or not to say it accurately, that sending the women back into the kitchen, kindergarten or Kirk will make them happier.

    It may not follow but I say it is worth a try.”

    If a woman *wants* to do that, then there is nothing to stop her and she will.

    • That is more or less true. We do make it harder. We have a tax system that is not encouraging. But most of all we have an education system that vilifies women who do that. And a media that is worse.

      We need to stop lying to young girls. We ought to be telling them the truth – work really does suck and the way to happiness is marriage to a good man with lots of children.

  4. Not mentioned by Gabby, but i’d say the most entrepreneurial demographic of all is the new mum, particularly one who has a partner who’s not insistant she get back to the grindstone. Suddenly the opportunity cost of going back to the old job is rather high. Better to be the boss. It does rather focus on the baby rearing industry, but

  5. Talking of retirement, we’ve got to a strange position of being told old people are “stealing” young people’s jobs, so hurry up and retire, and at the same time old people are too expensive to pay pensions to, so keep working.

    • That argument is not recent. I think a character of Steinbeck’s in, I think, “In Dubious Battle”, told someone that they needed to retire because they were taking a younger person’s place. It’s a very constrained notion of the world that there is only so much work to go around. The pension crises in so many places will perhaps lead to an argument that people as people age they not only should retire so the younger people get their jobs, but also that they have a duty to die sooner.

  6. I think what’s new is the dual message of telling old people to both bugger off stop working *and* keep working ‘cos there’s no pension. Fourty years ago my grandparents were all happy to dive into retirement as soon as possible and spend the next 30+ years living a life of leisure.