Thinking the figure on a price tag the true cost of purchasing an item or service, say a car or house, is a costly shortsightedness. Any choice we make has a cost involved. It costs money to buy a car, and it costs money not to buy one. It costs money to take paid sick leave, and it costs money not to take it. The loss of benefits of what you choose not to do is known as opportunity cost. Using this borrowed theory from macroeconomics can help you decide which of your options is most cost effective in monetary and non-monetary terms.
Every Choice Has a Cost
Opportunity cost is what determines our choices and includes more than monetary value. Why we choose one alternative over another is always subjective because people have different values. What does not change is that each alternative has a cost. In other words, it is not the cost of obtaining one thing but the lost benefits of not obtaining the other that determines opportunity cost. A willingness to examine opportunity cost when weighing choices helps us make better decisions that enhance long-term happiness.
To Mow or Not to Mow
For instance, I may decide to cut the lawn myself to save money, but if it takes an hour a week and I do this 4 times a month, am I really saving money? I lost 4 hours equal to $400. Had I let the lawn company do my lawn, I would have paid $200 and saved four hours of time. Not to mention that I may only have weekends to do the work, I am limited to when exactly the task could be done. If it rains all weekend, then what? A lawn company would reschedule the task during the week, but if I was working, I would have to figure out when I could fit it in. If I have allergies and mow it myself, despite taking precautions, I risk an asthma attack. That would mean ensuing medical costs for a breathing treatment and additional down time including time off work if the attack is severe. Either choice costs money. How do I decide?
It’s Free Money, Right?
Consider the cost of taking paid sick leave or not taking paid sick leave. When injured or contagious, I can stay home and still get paid $200 a day while the body heals. Coworkers do not risk catching my flu. Other times, paid sick leave glistens like a desert oasis when I’m feeling blue or stay up too late. Why do some people not take paid sick leave? Part of the problem in making choices is when people get stuck in a vicious circle of infinity about what might happen if either choice is selected. They tend to evaluate choices only in monetary terms, but there is more to making a choice than money.
Paid Sick Leave is Not Free
It costs you and your employer when you take sick leave. If your company hires someone to fill in for you, it costs them your pay plus a substitute. If you forgo sick leave and infect a co-worker, they may have medical costs and lose time from work. Now two employees are down. You prolong your ailment and delay your healing. Presenteeism, or doing what little you can at work while feeling ill, is not necessarily more cost effective for you or your company either. Taking paid sick leave costs me 80 percent of my daily salary because I can sell back unused days at that rate. I would not pay my employer $80 to let me take a mental health day, but I would accept $100 to stay home for the good of all concerned.
Mow Time Off Now or More Time and Money Later?
We all make different choices though we have the same amount of hours in a day. What determines the choices we make is opportunity cost. I value paying someone to mow my lawn rather than risking asthma attacks, having more free time rather than worrying about when I can fit it in, and letting my unpaid sick leave accumulate toward a nice family getaway or lump sum upon retirement. Any choice I make may have a price, but the secret to hacking happiness when making decisions is to minimize my opportunity cost, or loss of benefits. Let the values of neither peace of mind nor spirit be overlooked when weighing opportunity cost.