Don’t think about what you could have

#404

Friend of Democracy,

Why are people in affluent societies often no happier than those in less affluent societies?

Basic economics has an explanation.

Basic economics deals with relative scarcity. People use their available resources in such a way as to maximise their utility. Homo economicus, in other words.

So they choose what is best for them. But that automatically means that they can‘t select other opportunities.

In economic terms, there are costs of the things one can’t do.

This is where the term ‘opportunity cost’ comes into play.

Opportunity costs are calculated from the difference between the utility of the (chosen) best alternative and the (unchosen) second-best alternative.

Someone who buys a new car may not be able to go on a winter holiday. Beacuse the budget is limited. The actual benefit of buying the car is therefore not the benefit of driving the new car, but from the benefit of driving the new car minus the fun of being on a winter holiday.

This sounds like economics, and, yeah, it is, but it also reflects the reality of life. Possibilities might be unlimited, but life is limited.

Now we get to the point.

As a society becomes wealthier, not only does the benefit of the decisions made increase, but so does the potential benefit of those not made. Karl Homann and Andreas Suchanek write in ‚Ökonomie eine Einfürhung‘ (’Economics – An Introduction’):

“To exaggerate slightly, one could say that scarcity in this sense, namely as relative scarcity, is not a problem of shortage, but of abundance.”

In other words, as prosperity increases, so do opportunity costs, everything we cannot do.

So the rise in prosperity has an obvious downside. We may be getting more things, but there are still many more we don’t get.

Digitalisation does the rest. We are constantly reminded of what we don’t have. Paragliding in the Alps. The latest PlayStation. A fulfilled life on a farm in the wild. Bright white teeth. Our screen shows us all around the clock what we could have if we had (even) more money and time.

The latter even affects the wealthiest people, who supposedly can afford everything. Form them as well, a day has 24 hours.

Time scarcity most strikingly demonstrates the high opportunity costs of our affluent lives. We could do so much if only we had more time!

But we don’t. Days are and life is limited.

What to do?

There is this simple advice: Don’t focus on the opportunity costs, but on what we actually do.

If you buy a car, enjoy driving it. Don’t think about the fancy skiing holiday you missed out on. If you treat yourself to lunch at a restaurant, enjoy it. If you go to the cinema instead of buying a book, don’t mourn the book reading, even if you don’t like the film.

There is no point in living in the world of opportunity costs, letting your thoughts revolve around the question: What could I have done? Those who ask “what if” suffer from today’s increase in possibilities. Those who instead look at what actually is will find happiness in prosperity.

See you in Democracy,

Johannes Eber