As
we live our lives, there are tendencies to overlook the costs of our
actions. In the blog “Unsettling
Economics”, the discussion of hidden costs in society is mentioned, and made me
think about the costs we overlook in everyday life.
In
the post, the example used was a murder by a war veteran claiming trauma. The point made is that the costs of war didn’t
account for the effects seen in this scenario.
Hidden
costs in everyday life I feel many people overlook include grocery shopping. Suppose you are looking to go to the store,
and there are three choices: the local market across the street, the Albertsons
10 minutes away, and the Costco 25 minutes away. You realize that the prices of goods at the
places get cheaper as you go further from your home, but there are actually
some hidden costs you and others likely forget to factor into the decision
making process. For the Albertsons and
Costco, going to either of the two locations for a discounted gallon of milk and
some pasta may not be worth the costs (including gas and valuable time) of
getting to the store. Furthermore,
Costco puts a barrier to enter the store, and the costs must be factored in for
each time one attends the bulk store.
So
what do we do to attempt to counter the hidden costs? We try to buy more to
make the trip more valuable. But in
doing so, Albertsons and Costco get what they want from you. While you may not have fallen for the hidden costs
that typically shape the initial journey to the market, you have exceeded to
purchase products that may not have been necessary. Instead of buying the milk and pasta, you
purchase Oreos, beer, and some plastic cups.
Hidden costs surround us everywhere we turn, and if one is not careful
we will fall into the same trap over and over again.
On
the macroeconomic level, a hidden cost that can be pointed out and not
necessarily accounted for until it is too late comes when forecasting models. Because of the art of using ARMA,
specifically trying to accurately forecast data via historical figures, the
attempts to rely heavily on historical data can be overlooked. The costs, while in the previous example were
merely a few dollars, could result in heavy swings among the economy as a
whole. The recognition of the harm in
improper forecasts is important for economists in order to build faith among
Americans and to bring stability to the economy.
The
article, while short, really opens the mind up to the hidden costs we forget
about every day. So take some time to
think of something that you may overlook, and really ask yourself what we could
be doing to accurately choose the right decisions, where the costs never exceed
the benefits.
References:
- “Class, Pschology, and Capitalism”. Unsettling Economics.
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