Opportunity Cost and Christianity
Lately, I have been thinking a lot about the materialism that permeates our culture in America, both in Christians, Non-Christians, and even churches. On my 1.5 hour commute yesterday, I had an interesting thought that uses information I learned in my college Business Economics class (yeah, I know, who would have thought I would use that stuff).
The thought I had was that I think as Christians, we should do a better job at thinking about Opportunity Cost when it comes to how we spend the money and resources that we are blessed with. So what is Opportunity Cost? The definition on Investopedia.com is, "Opportunity Cost is the cost of an alternative that must be foregone in order to pursue a certain action. Put in another way, the benefits you could have received by taking an alternative action."
For example, if a gardener decides to grow carrots, his or her opportunity cost is the alternative crop that might have been grown instead (potatoes, tomatoes, pumpkins, etc.). Another example is the opportunity cost of going to college is the money you would have earned if you worked during that time instead. On the one hand, you lose four years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to offset the lost wages.In both cases, a choice between two options must be made.
So how does this relate to Christianity? Well, I think we live in a time where people do not think about the opportunity cost of them buying a $250,000 house, a $25,000 car, a $1,500 t.v, a $20 dinner, etc. If we take a serious look at the amount of money we spend each year on entertaining ourselves, I think it would probably surprise us. I just wonder how much the average person who claims to be a Christian spends on things like video games, movies, hobbies, cable, ball games, and other things entertainment related. A lot of times I think the main reason people would adjust their budget or how they spend money on things is because of their own financial reasons. But I am suggesting that as Christians, something else should drive our spending habits.
For example, the opportunity cost of buying a $250,000 house instead of $150,000 house with a 30-year loan would be $100,000 plus all the extra interest over the life of the loan, plus more taxes and insurance for a total of over $300,000 in opportunity cost. So what could be done with $300,000? Well, I looked at the World Vision website to see what could be done with that much money. $300,000 could buy 24,000 chickens, or 4000 goats, or even 600 dairy cows to help the poor people in other countries get nourishment and extra income. Or you could buy almost 17 deep water wells that would provide safe water for as many as 5,000 people. Or imagine all the clothes that could be bought to clothe the poor or meals that could be bought for the homeless. So what the true opportunity cost of choosing to live in a nicer neighborhood or get a bigger house is that 5,000 people will not have safe water, thousands of families will possibly die of starvation or go without clothes. And that is just the impact of one person choosing their house. Imagine the opportunities if all Christians based their decisions on the good they could do instead, and spent less on housing, transportation, food, entertainment, etc. We really could change the world.
I heard on the radio this week the illustration given that if we were walking by a lake and saw a little girl screaming for help and drowning, we immediately have a choice to make. We can either help save her or let her drown. The point was clear that the correct decision would be to do whatever you can to save the drowning person. The radio guest then made the point that thousands of people are dying every day in third world countries because they do not have food, water, or medicine. Just like seeing the little girl, when we know that children are dying in other countries we have a choice to make. We can either help save them or let them die.
Now I often hear the argument that people that have nice houses use them for God's purposes, so that can be good thing. So I guess they will have to decide whether or not what they do with their house will outweigh the opportunity cost. Thats what opportunity cost is used for. Helping choose between two alternatives. We can either use the money that we have to use on ourselves or others.
And this does not just relate to individual Christians. I know a church that has started a campaign to raise $9 million to renovate their building. Imagine what the opportunity cost is of that much money. Just multiply all the above examples by 30. And yet it seems so many church buildings are being built, renovated, or expanded all across the country by those who claim that their mission is to help those that are poor and needy.
And opportunity cost does not just relate to money. Our time is also an important resource. A guy who spends an hour watching ESPN could have spent that hour with his family, or reading the Bible, or feeding the homeless.
The Bible states in Mark 12:31 that the second greatest command is "Love your neighbor as yourself." Considering this is the second greatest command, we should definitely look at our lives to see that our lives reflect this. Does the way we spend our money show that we love our neighbors as much as we love ourselves? For every $5,000 we spend on ourselves, do we give at least that much to help others? Or do we tend to spend most of our money on ourselves and not consider what benefit that money could do for our neighbors both in the U.S and in other countries. Or for every hour we spend relaxing or having fun, do we spend any time serving or loving others?
I encourage everyone to consider the opportunity cost when we make decisions in our lives. Because we usually have two choices. We can either spend money and resources on ourselves or we can use it to help others. My prayer for myself is that I can start choosing the latter.
The thought I had was that I think as Christians, we should do a better job at thinking about Opportunity Cost when it comes to how we spend the money and resources that we are blessed with. So what is Opportunity Cost? The definition on Investopedia.com is, "Opportunity Cost is the cost of an alternative that must be foregone in order to pursue a certain action. Put in another way, the benefits you could have received by taking an alternative action."
For example, if a gardener decides to grow carrots, his or her opportunity cost is the alternative crop that might have been grown instead (potatoes, tomatoes, pumpkins, etc.). Another example is the opportunity cost of going to college is the money you would have earned if you worked during that time instead. On the one hand, you lose four years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to offset the lost wages.In both cases, a choice between two options must be made.
So how does this relate to Christianity? Well, I think we live in a time where people do not think about the opportunity cost of them buying a $250,000 house, a $25,000 car, a $1,500 t.v, a $20 dinner, etc. If we take a serious look at the amount of money we spend each year on entertaining ourselves, I think it would probably surprise us. I just wonder how much the average person who claims to be a Christian spends on things like video games, movies, hobbies, cable, ball games, and other things entertainment related. A lot of times I think the main reason people would adjust their budget or how they spend money on things is because of their own financial reasons. But I am suggesting that as Christians, something else should drive our spending habits.
For example, the opportunity cost of buying a $250,000 house instead of $150,000 house with a 30-year loan would be $100,000 plus all the extra interest over the life of the loan, plus more taxes and insurance for a total of over $300,000 in opportunity cost. So what could be done with $300,000? Well, I looked at the World Vision website to see what could be done with that much money. $300,000 could buy 24,000 chickens, or 4000 goats, or even 600 dairy cows to help the poor people in other countries get nourishment and extra income. Or you could buy almost 17 deep water wells that would provide safe water for as many as 5,000 people. Or imagine all the clothes that could be bought to clothe the poor or meals that could be bought for the homeless. So what the true opportunity cost of choosing to live in a nicer neighborhood or get a bigger house is that 5,000 people will not have safe water, thousands of families will possibly die of starvation or go without clothes. And that is just the impact of one person choosing their house. Imagine the opportunities if all Christians based their decisions on the good they could do instead, and spent less on housing, transportation, food, entertainment, etc. We really could change the world.
I heard on the radio this week the illustration given that if we were walking by a lake and saw a little girl screaming for help and drowning, we immediately have a choice to make. We can either help save her or let her drown. The point was clear that the correct decision would be to do whatever you can to save the drowning person. The radio guest then made the point that thousands of people are dying every day in third world countries because they do not have food, water, or medicine. Just like seeing the little girl, when we know that children are dying in other countries we have a choice to make. We can either help save them or let them die.
Now I often hear the argument that people that have nice houses use them for God's purposes, so that can be good thing. So I guess they will have to decide whether or not what they do with their house will outweigh the opportunity cost. Thats what opportunity cost is used for. Helping choose between two alternatives. We can either use the money that we have to use on ourselves or others.
And this does not just relate to individual Christians. I know a church that has started a campaign to raise $9 million to renovate their building. Imagine what the opportunity cost is of that much money. Just multiply all the above examples by 30. And yet it seems so many church buildings are being built, renovated, or expanded all across the country by those who claim that their mission is to help those that are poor and needy.
And opportunity cost does not just relate to money. Our time is also an important resource. A guy who spends an hour watching ESPN could have spent that hour with his family, or reading the Bible, or feeding the homeless.
The Bible states in Mark 12:31 that the second greatest command is "Love your neighbor as yourself." Considering this is the second greatest command, we should definitely look at our lives to see that our lives reflect this. Does the way we spend our money show that we love our neighbors as much as we love ourselves? For every $5,000 we spend on ourselves, do we give at least that much to help others? Or do we tend to spend most of our money on ourselves and not consider what benefit that money could do for our neighbors both in the U.S and in other countries. Or for every hour we spend relaxing or having fun, do we spend any time serving or loving others?
I encourage everyone to consider the opportunity cost when we make decisions in our lives. Because we usually have two choices. We can either spend money and resources on ourselves or we can use it to help others. My prayer for myself is that I can start choosing the latter.
posted by D Love at 8:48 AM
2 Comments:
Yeah but the bible doesn't say that I can't have a nice house and a really fast car. You know we all have to make sure that we are taking care of ourselves so that we can take care of others. God wants me to have a $250,000 house, I know it.
But seriously, I am actually talking about our tendency toward greed on Wednesday night with the youth group. I'm going to go all "Damon Parker chapel talk" up in their faces. I may even throw some opportunity cost at them. :)
Great thoughts. Like Pacino said in The Devil's advocate, "free choice is a bitch". Wouldn't it just be so much easier if God laid every decision out like he did in Genesis--wait, we didn't do so good on that one either. I guess that where being tuned into God's spirit comes in--where we have to deal with the questions like the ones you've raised. Recently I've learned a person's wisdom is better discerned or demonstrated not by what they know but by the quality of questions they ask.
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