One of my favorite things to read about is social economics. Whether it’s in a bestselling book, a moderately well-selling book, blogs on the subject (even those that use specific examples), on the news, in a textbook… the application of economic theory always lends itself to some very interesting results.
And there is one specific economic theory that is critical for all job seekers to understand when considering where to work, what job to take, and so on. It’s called opportunity cost.
Opportunity cost can be best summarized by Newton’s Third Law of Physics (“To every action there is an equal and opposite reaction”); it tells us that in order to do anything (to receive the incentive from it), we pay for it in the cost of something else. However, the relative value of the incentive and cost are subjective and based on the person taking action. For example:
- When you stay in to study (action) to get a good grade on a test (incentive), the cost of this action is free time to hang out with your friends (loss). If you need a good grade, studying is worth more than hanging out.
- When you buy something (action) so you have it (incentive), the cost is money (loss). If the item is more important to you than what it costs, you should buy it.
- When you date Person A exclusively (action) to enjoy a relationship with them (incentive), the cost is the chance to date Persons B, C, D and E (loss). If your relationship with Person A is worth more to you than starting another one, you should not break up with them.
It’s like the old phrase, “a bird in the hand is worth two in the bush.”
If you take Job X to get money and benefits, it costs you the opportunity to look for other jobs. If you look for jobs in one area to get hired, it costs you the chance to look for jobs in other areas at that time. As such, you might experience buyer’s remorse after taking the job, but remember that having access to the money and benefits of Job X right away (rather than later on in some other job) is a benefit.
Since you have a finite amount of personal resources and time, determining how to use them to you best ability is the way in which you can make opportunity cost work in your favor. In short, you need to establish a list of priorities based on results and craft your job search accordingly.
Let’s say that you are a social person who is fairly comfortable calling up strangers and are competent with a computer. In terms of job search methods, you might prioritize networking as the most important, followed by cold calls, with Internet job sites in last place. Or, mathematically speaking:
Networking > Cold Calls > Online Applications
So let’s say that you have been working on a series of online applications when you find out about a networking event. You would gain a greater benefit from going to the event than continuing the online applications. The cost of missing out on the networking event is greater than the cost of not doing online applications.
Similarly, deciding to leave a job (which can still happen, even in this economy) requires a priority list: is it more important to leave the job or stay and make money? Or more appropriately, if you quit, do the pros of your decision outweigh the cons?
Whether you are aware of it or not, nothing is free, from decisions to actions to gifts. In order to get anything, you have to sacrifice something else. And when it comes to your career, you should make sure that your opportunities cost what you want them to.
