Saturday, February 19, 2011

Opportunity Cost

If there's one concept that pops into my thoughts a lot, it's opportunity cost.  Opportunity cost can be defined as the resources used for something that then cannot be used for something else.  For example, if I spend an hour learning Japanese, then I cannot spend that same hour updating my blog.  If I spend $10 on a book, I cannot spend it to go to the movies.

This is one of the causes of my undecidedness.  If I decide to spend time and money to work on my PhD, I cannot spend that time and money on teaching English in Japan.  I tend to look at the estimated total cost, usually just with time and money, when thinking about what I want to do with my life.  I want to generalize enough to try and create lots of different things, but I want to specialize enough to make a good enough living to have my own house and the time and money to work on other things. 

This is one of the reasons why I've spend a bit of time lately thinking of passive income.  By writing ebooks and automating the selling process, I can make money while learning card tricks, or traveling in Japan, or taking a cooking class.  I could create a blog dedicated to a single topic, but what topic do I know enough about to spend time and effort on? 

Once I know the opportunity cost for something, I can then spend time thinking about the pros and cons.  If I do x, spend y dollars and z hours, what do I get out of it?  It is personal satisfaction?  5x dollars?  Some new bit of knowledge?  Do I spend years of my life working toward a PhD just to earn the same salary as before I started, as well as be stuck in a specialty with little time to explore?

My personal question is, "What opportunities do I have where I make a living and still have time to play piano, draw, garden, learn Japanese, take random classes, travel, and, most importantly, start a family?"  House husband to a rich woman is the easiest answer.  I doubt I'm qualified for that, though.

Sometimes I wish I was one of those who didn't even think about opportunity cost.  I could just choose whatever I wanted without thinking of missed opportunities.  I guess it's a pain when you want to have more of the pros of life and avoid more of the cons.


  1. Hmm.

    Writing books does seem like an interesting semi-passive income opportunity, but I wouldn't go with ebooks. Traditional books, with ebook counterparts, seem like a better market. (This goes with your "KAAAAAHHHN" post.)

    There are also a few emerging content-creation opportunities. You could try shapeways:

    That's a small passive income if you create 3d models which others enjoy enough to pay for solid copies.

  2. Yes, and I could upload photos as well and earn money from that. I hadn't heard of shapeways, so thanks for that heads up. Nice site; hope I don't go broke buying form there.

    The problem with printed books is that you need a publisher to make money out of it, unless you go with the still unproven self-publishing. An ebook can much more easily be sold online through my own website. And ebooks are much easier to create.

    Not sure what I'll do about passive income at the moment.

  3. Yea, the market cuts both ways. :) I'm tempted to buy some things too-- Daniel already gave in.

    A friend just sold some photos to a gallery for thousands... bit of luck, but it goes to show that uploading to stock photo sites is not necessarily the best way to make money on photos!