Opportunity cost is a concept that refers to the potential income one misses out on by choosing one alternative over another. For example, if a professional decides to leave their job to start their own practice, they are giving up their monthly salary. This foregone salary represents the opportunity cost of starting the practice. In other words, the income they could have earned from their employer is the cost of pursuing their new venture.
However, the concept of opportunity cost does not always apply straightforwardly. When people make decisions based on passion, personal satisfaction, or emotional fulfilment, the calculation becomes more complex. These emotional and psychological benefits are not easily quantified in monetary terms. For example, someone might choose to work in a lower-paying job because it brings them more joy or aligns better with their values. In such cases, the opportunity cost in terms of lost income is less significant compared to the intangible rewards they receive.
In simple terms, opportunity cost is about understanding what is lost when one chooses a particular path over another. It highlights that every decision involves a trade-off and encourages individuals to think carefully about their options. While the concept is useful for financial and career decisions, it is not always applicable when emotional factors are involved. In conclusion, opportunity lost is essentially the opportunity cost.
