What Am I Giving Up?

Keystone Principle #2 – TANSTAAFL (There Ain’t No Such Thing As A Free Lunch)

Voluntary National Content Standards: #1, #3

Connection:

Young and old alike find it easier to anticipate the benefits of potential choices than to anticipate the costs. Our thoughts focus on all the positive things we expect our choices to bring us. That anticipation can cloud our minds and blind us to the variety of attendant costs we will necessarily incur. When we are very young, we view the world in terms of its direct impact on ourselves, and your students will respond to the economic concept of cost by making it personal – “What will it cost me?”

Help your students broaden their understanding of cost. Show them how to look beyond the question of monetary cost to include time, energy, and psychic costs as well. Consider whether an initial cost is just the beginning or whether there are long-term costs (begging for a puppy may entail more work for a longer period that anticipated). Sometimes the opposite is true – the cost may be short-term, but the benefit is long-term (taking the time to help a friend may cement a long-term friendship). Even when we calculate and shoulder our own cost, we may fail to consider the cost it imposes on other people (Melanie uses the family computer to write a school report, but uses up the remaining stack of computer paper).

As students become increasingly sophisticated in their reasoning ability, help them to see that their best decisions are made when they have a genuine understanding of the opportunity they are giving up. We all live with trade-offs, and it is important to ensure that when we make a choice and forego some particular thing, we have actually chosen something we value more in its stead.

Objectives

I. Understanding

  • All costs should be recognized.
  • You often have many initial alternatives from which you can choose, but in the moment of choice, you choose between only two things.  That next best choice you didn’t pick is called your opportunity cost.
  • Most choices are not choices between desirable and undesirable options.  We usually choose between two similar options or varying degrees of the same thing.
  • Sometimes we confuse Cost and Price. If you ask the average person, “How much did those new shoes cost?” they’ll say, “$100.”  The price of the shoes was $100.  If, however, we are thinking economically, we realize that the $100 represents time or leisure given up in exchange for $100 in income.  The real cost of your shoes might be 15 hours bagging groceries.
  • Economics measures tangible and intangible costs such as time, labor, morality, safety, or forgone leisure.

II. Skills

Students will be able to:

  • identify opportunity costs
  • distinguish between cost and price
  • identify tangible and intangible costs

Activities

I. Concept Vocabulary

  • Cost – An amount that must be paid or spent to buy or obtain something. The effort, loss, or sacrifice necessary to achieve or obtain something.
  • Intangible cost – An intangible thing (something you can’t see or touch) that you give up in order to get something else you want more.
  • Opportunity cost – The second-best alternative (or the value of that alternative) that must be given up when scarce resources are used for one purpose instead of another.
  • Price – The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.
  • Tangible cost – A tangible thing (something you can touch or see) that you give up in order to get something else you want more.
  • Trade-off – The giving up of one benefit or advantage in order to gain another regarded as more favorable.

II. Journals

Initial Prompt (to be done during the introduction of this monthly theme/principle):

  • Write down five things you would like to do on this coming Saturday.
  • Your mother tells you that you only have time to do two of them.  Choose three things to come off your list.
  • Now your mom tells you that your cousins are coming over and that you have time only to do one of the things on your list.  Choose between the two things you have left on your list.
  • The last one that you took off you list is your opportunity cost in this choice.

General assignment:

Choose one or two of the quotations and write a journal entry of at least half a page. For K-2nd grades, you may do this exercise as part of a discussion. Or, ask the students to draw an illustration of a quotation or the monthly theme/principle.

  1. Restate the idea in your own words.
  2. Say whether or not you agree with the statement.
  3. Explain why you agree or disagree.
  4. Discuss how you have seen it expressed in your own life.

III. Quotations:

  1. “I shall be telling this with a sigh, somewhere ages and ages hence: Two roads diverged in a wood and I- I took the one less traveled by, and that has made all the difference.”  Robert Frost
  2. “You have brains in your head, you have feet in your shoes, you can steer yourself in any direction you choose.”  Theodor Seuss Geisel (Dr. Seuss)
  3. “You can’t have your cake and eat it too.” Anonymous

Lessons

Little Nino’s Pizzeria (from the Powell Center Lessons)

Late to Class: What Does it Cost Me? (from the Powell Center Lessons)

That’s Not Fair! How Do We Share? (an EconEdLink online lesson)

Off to Interactive Island (an EconEdLink online lesson)

It Seemed Like a Good Idea at the Time (from the Powell Center Lessons)

Monthly Teaching Theme Assessments are available by subscribing to the Infusionomics program. To subscribe, please call 720-425-1642.