Opportunity Cost: The True Costs of College

Every day, we have to make decisions, be it small, like trying a new soap, or huge, like moving abroad. Each such decision comes at a price. This price is the benefit we forego by not choosing the other option.…

Opportunity Cost: The True Costs of College

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Every day, we have to make decisions, be it small, like trying a new soap, or huge, like moving abroad. Each such decision comes at a price. This price is the benefit we forego by not choosing the other option. Economists call these benefits “opportunity costs”. Although they are often less obvious and sometimes speculative, opportunity costs can be huge, therefore, learning about them makes sense! Watch our video to learn more about what opportunity costs are, how they work in real life, and how you can calculate the true costs of going to college.

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COLLABORATORS
Script: Jonas Koblin
Artist: Pascal Gaggelli
Voice: Mithrilda
Coloring: Nalin
Editing: Peera Lertsukittipongsa
Head of Partnership Program: Selina Bador
Production: Morgan Lizop
Proofreading: Susan
Sound Design: Miguel Ojeda

SOUNDTRACKS
Cannonball Swing – RimskyMusic

DIG DEEPER with these top videos, games and resources:
Listen to this podcast with Michael Munger of Duke University and Russ Roberts talk about the economics of ticket scalping, gifts, and opportunity costs; https://www.econtalk.org/ticket-scalping-and-opportunity-cost/
Read about Sunk costs; https://en.wikipedia.org/wiki/Sunk_cost
Read about opportunity costs, how investors define it; https://www.investopedia.com/terms/o/opportunitycost.asp

SOURCES
Opportunity costs – by Econlib; https://www.econlib.org/library/Topics/College/opportunitycost.html
Opportunity costs – Wikipedia; https://en.wikipedia.org/wiki/Opportunity_cost

CLASSROOM EXERCISE
Exercise 1: The costs of dropping out of college
Let your class calculate the opportunity costs of a high school student who thinks about dropping out of college to help in the family business instead:

The cost of tuition and living is $2,000 a month.
It takes a total of 6 years to finish university.
After obtaining a degree the student can work in the field of medicine for 34 years earning $10,000 a month and spending $3,000 on monthly living expenses.
If the student is entering the family business he or she earns $3,500 a month right away for the next 40 years with zero living expenses.

What is the cost of dropping out of college?

CHAPTERS
00:00 Intro to Opportunity Cost
00:28 Trade off concept
00:49 Cost of college
01:37 Opportunity cost of college
01:59 Calculation exercise
02:45 Patron credits
02:55 Ending

TAGS
#econ #economics #opportunitycosts #sproutslearning

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