Tuesday, January 29, 2008

There is No Such Thing as a Free Lunch or Airport Screening

Economists are fond of the phrase “there is no such thing as a free lunch.” For those of you did not take Econ 101. Here is an example: I had dinner the other night with a job candidate that Towson paid for, but I did not get to eat dinner with my wife. Although the meal had no direct cost to me I lost out on the opportunity to have dinner with my wife, that is the opportunity cost of dinner so no free lunch (or in this case dinner).

My favorite thing to do on the first day of Principles of Microeconomics is to ask the students what it costs them to stay in class today and should I end class early on the first day. Usually I find out that they pay an opportunity cost of lost sleep, later lunches, less facebook checking time, although I’m not sure about their suggestion if I ended class early they would study more as they claim.

If you travel on an airplane you also face opportunity costs. Particularly, if you have to arrive an hour and a half early in case of long security lines. So a newish product called “Clear” was created to help those with high opportunity costs. Those who pass a background check and purchase an identity card get to go through a quicker security line. What this means is they can now show up to the airport even closer to their flight, cutting down the opportunity cost of waiting in line.

So who purchases the “Clear” card. This amusing article suggests it is people who do not like to wait in line. They are also wealthier people who could be working more instead of being in line. It also is people who travel often who have to pay the opportunity cost a lot.

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