Opportunity Cost & Non-Responsive Bias: Is it the right time to throw in the towel?
Now those are really big words in the title up there but their meanings are relatively simpler to understand and I am sure by the end of this post, you might be able to make some really good quick decisions when you have lots of choices in mind.
Let’s start with Opportunity Cost. Ever felt the tug of war in your mind between completing a school project which could take about an hour or play Minecraft for the same time instead? The school project might not have a deadline and so it’s relatively easy to push it off for some other time and play some Minecraft but Hey Wait! Who said there was a deadline for Minecraft either? You just made a decision… without calculating the opportunity cost!
Now there are some complex equations for opportunity cost (mostly from Economics Thesaurus) but we can put it for a layman with something like Opportunity Cost is what a person sacrifices for choosing something over alternate options.
In the example above, the opportunity cost could be a loss of one hour of school project work today and whether it adds up to more work for tomorrow (Damn It! More assignments from teachers). Assuming now that you have 2 hours of school project work for tomorrow, will you still play Minecraft for one hour today? Your Opportunity Cost for tomorrow is thus, 1 Hour of Minecraft today.
One thing I love to do to strengthen my mind about getting things done is the One Year Rule (which I heard from YouTuber Ali Abdaal in his video): A year from now, what will I regret not starting now? This hits me deep always, makes me procrastinate less, and immediately gets me on my feet to start doing what I always wanted to make time for.
Another thing that comes out with the usual frustration of such workload is: You know what? I am tired of school/university? I might as well drop out I mean it worked for Bill Gates and Steve Jobs and so many others… the survey facts are out there!
Well, not really. When it comes to surveys there is one thing we all forget to consider. Let’s take the example of the university dropout survey. It’s easy to come under the influence of speakers who talk about their ‘university drop-out’ times and how they made it big thereafter. But what about those who didn’t? Have you heard from them yet? Are they doing well financially and psychologically? Are they also giving TED Talks about their dropout? Unfortunately, no. And this is what we call, the non-responsive bias.
Non-responsive bias simply refers to the bias that occurs when people in a survey are unable or unwilling to respond. Even the people who make successful careers after their dropout might be unwilling to share some anecdotes or life aspects that might not cheer up some people. It’s not always a win-win situation.
So what is the right time to throw in the towel, you might ask? And for that, we now link the two mental models together. Calculating opportunity costs before making a decision to prevent casualties from non-responsive biases. By having an open ear and eye for what might not seem as it is in a survey (non-responsive bias), we can calculate opportunity costs for the decisions we are about to make from the options presented. Don’t worry if you have too many options to calculate opportunity costs from, at least you are more well informed and aware of the non-responsive bias involved.
Takeaway: Make sure to calculate opportunity costs and keep in mind common non-responsive biases (in surveys and polls) before taking a decision.