Yesterday morning my wife and I were planning to celebrate our wedding anniversary with dinner at an upscale restaurant. We had been to the restaurant in the past and were impressed by its atmosphere and the quality of its meal ingredients, preparation, and service. We also checked the menu online and decided our likely menu choices greatly exceeded their respective prices on “our” (i.e., her) value scale. But by late yesterday afternoon, the cost of the meal had risen so much that we no longer could afford it, despite the fact that the restaurant prices, our culinary tastes, our household income prospects and the market value of our real and financial assets had not changed during that short period. What happened was that we wandered into a bake shop and cafe that displayed on its walls the original paintings of several local artists that were for sale. My wife’s desire for one of the paintings suddenly made each dollar much more valuable relative to the enjoyment from our prospective dinner. In economic terms, the opportunity cost of our planned anniversary dinner, in terms of the higher valued painting we would have to forego, now exceeded its expected benefit. Thus we celebrated our anniversary with a very good antipasta salad and pizza—although the whole time I thought about a cashew-encrusted rack of New Zealand lamb brushed with honey and served with whipped garlic mashed potatoes.
Undone by Opportunity Costs
