Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. Because opportunity costs are unseen by definition, they can be easily overlooked. Understanding the potential missed opportunities when a business or individual chooses one investment over another allows for better decision-making.

What Is Opportunity Cost?

Opportunity Cost = Return on best foregone option (FO) – return on chosen option (CO)The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. company is faced with the following two mutually exclusive options:

Formula and Calculation of Opportunity Cost

The key difference is that risk compares the actual performance of an investment against the projected performance of the same investment, while opportunity cost compares the actual performance of an investment against the actual performance of another investment.The key difference is that risk compares the actual performance of an investment against the projected performance of the same investment, while opportunity cost compares the actual performance of an investment against the actual performance of another investment.Still, one could consider opportunity costs when deciding between two ri<warningtag>sk profiles.</warningtag>

Opportunity Cost and Risk

Opportunity cost is used to calculate different types of company profit. <ul><li>The most common type of profit analysts are familiar with is accounting profit. Accounting profit is the net income calculation often stipulated by Generally Accepted Accounting Principles (GAAP). Only explicit, real costs are subtracted from total revenue.</li><li>Economic profit (and any other calculation above that considers opportunity cost) is strictly an internal value used for strategic decision-making. There are no regulatory bodies that govern public reporting of economic profit or opportunity cost. </li></ul>

Economic Profit and Accounting Profit

The downside of opportunity cost is it is heavily reliant on estimates and assumptions. There's no way of knowing exactly how a different course of action may have played out financially. Therefore, to determine opportunity cost, a company or investor must project the outcome and forecast the financial impact. This includes projecting sales numbers, market penetration, customer demographics, manufacturing costs, customer returns, and seasonality.

How Do You Determine Opportunity Cost?

Learn to evaluate life and business choices via the lens of Opportunity Costs

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Problem Solving

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Business

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Money & Investments

What Is Opportunity Cost

Considering the value of opportunity costs can guide individuals and organizations to more profitable decision-making.

Opportunity cost is the potential forgone profit from a missed opportunity—the result of choosing one alternative and forgoing another.

Opportunity Cost Formula, Calculation, and What It Can Tell You

Many workers are happy in their new positions amid the Great Resignation. But in hindsight, not everyone is pleased with their decisions. According to a March survey of around 2,000 US workers who quit their job in the past two years, about one in five said they regretted doing so. Many employees expressed remorse for their new role.

Regret over joining the Great Resignation

For nearly a year, about four million US workers quit their jobs every month for better pay or roles that align more with their values. This contributed to the hiring crisis that's seeing great competition for talent. Other countries find themselves in the same situation. Many workers are tempted to change jobs due to the scramble for candidates. Recruiters oversell positions with flashy sales pitches, and candidates may miss some red flags.

Why regret is on the rise

When colleagues resign in a hot job market, workers may feel they are missing out. They may view all other companies with rose-tinted glasses and overweigh the positives of trying something new. Currently, it is also easier to quit than to have tough conversations with management. But people often don't realise that every job has its own issues, leading to intense quitter's remorse.

The grass is greener on the other side

It is common for new employees to reminisce over previous workmates and past tasks and then feel regret. Quitter's remorse can cloud an employee's judgement. During a difficult transition, a worker in the current job market may be quick to quit again. The danger is constantly restarting the cycle. The best is to acknowledge regret and then push through those feelings while adjusting and building up your relationships and effectiveness at the new job.

Regret as part of the job

Plenty of workers are happy in their new positions amid the Great Resignation. But for some, hindsight is 20/20.

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Career

Quitter's remorse: The workers who regret resigning

<ul><li>Nearly 20 million Americans quit their jobs between April and August this year, and the trend seems to be accelerating. </li><li>Now dubbed the Great Resignation, this employment exodus stems from workers’ desire to find more fulfillment in life and work. </li><li>While quitting may benefit some, experts agree that smaller adjustments can have sanguine results, as well.</li></ul>

Key Takeaways

Americans regularly quit their jobs in the ‘60s and ‘70s, but that pace only began to slow in the ‘80s. Among a barrage of <a href="https://www.businessinsider.com/what-happened-to-american-jobs-in-the-80s-2017-7">Reagan-era</a> spending cuts, deregulation, and shifting corporate culture, American workers became devalued in the economy. As their <a href="https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/">purchasing power stymied</a>, they shackled themselves to their jobs — even <a href="https://bigthink.com/the-present/imagine-world-without-bullshit-jobs/">the BS ones</a> — for affordable healthcare and a financial safety net. The era also intensified the cultural belief that today sees quitting as a sign for losers, unloyal job hoppers, or (worse!) <a href="https://www.cnbc.com/2017/05/10/90-of-millennials-will-stay-in-a-job-for-10-years-if-two-needs-met.html">millennials</a>.

The Background

A likely culprit of this mojo rejuvenation is the COVID-19 pandemic. In 2020, Americans found their lives upended by shutdown measures. They were laid off. They became their children’s full-time teachers and part-time social outlets. Those lucky enough to keep their jobs struggled as their industries transformed amid ever-revolving kaleidoscopes of rules and mandates. All of which generated immense stress that eroded people’s well-being.

The Main Reason For The Great Resignation

Workers are now prioritizing flexibility, work-life balance, and benefits more than salary. Additional motivators are dissatisfaction, a search for safer working environments, a desire for work that aligns with skills and values, and better pay.

Reconsidering Priorities

That depends. Yes, that may be a bit of a dodge, but it’s also the only acceptable response. Such a question can’t be answered in an article or through a multiple-choice quiz. It requires a deep analysis of what makes you satisfied at work, what you need to live a fulfilling life, whether your job meets those needs, and how you want to grow your career. No one can divine whether the stars have aligned in your favour for you.

The Decision Of Joining The Great Resignation

<ul><li>What is your financial situation?</li><li>What are your family obligations?</li><li>What values should your job align with?</li><li>What job can you secure with your current resume?</li><li>Do you need further education? Reskilling?</li><li>What do you need to maintain your health and mental well-being?</li><li>How do you want to challenge yourself?</li><li>Are you looking to move up the career ladder? A lateral move to a new field?</li></ul>

Ask Yourself This Before Quitting

You can only resign if you have a choice.

They happen outside your control, and you have to decide how to respond. If the restaurant you worked at closed during the pandemic, you encountered a negative moment. If a former coworker offers you an attractive new job because of the current labour shortage, that’s an unexpected moment.

Involuntary Quitting: Negative Or Unexpected Moments

Jumps are voluntary changes. You choose to change your situation, and you do so. Those joining the Great Resignation are taking this leap.It becomes complicated when we hit a ceiling. These do-over moments aren’t barriers to your progress. When you hit a ceiling, you need to make a jump, but you are voluntarily standing still. You are the barrier.Sometimes when you’re stuck, you have to ask, “Am I blaming other people right now? Am I blaming my boss? Am I blaming the economy? Am I blaming coworkers?”

Taking The Leap: Jumps And Ceilings

The lesson from this moment in history is not that people are quitting. It’s that they’ve decided to seize the moment and work for something better. Good enough is no longer good enough. They want meaningful lives, work that is fulfilling, and the opportunity to strive for their passions. Whether that comes from a large do-over moment or a small change is irrelevant. Either way, we’ve entered the Great Affirmation.

The Great Affirmation

Millions of Americans are quitting their jobs, but even if you can’t join the Great Resignation, you can still pursue a do-over moment.

Discover the world of business and economics.

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Economics

The Great Resignation is here. Is now the perfect time to quit your job?

"Inside the workplace, there’s formal influence, which comes from your position—the responsibility and authority that you’ve been given. But there’s also informal influence, which comes from who you are and how you show up.”

Influence starts with the areas within your control. First off, focus simply on being good at your job.Being good at your job is one of the basic elements of influence. It lets people know that you’re confident and capable. Failure to do so undermines influence and makes it more difficult for people to trust you.

Focus on what you can control

Understanding the areas in which you may most likely be influential is important, too. If you have special expertise or act as a facilitator or gatekeeper, the way you share and distribute knowledge or resources can make you influential.But there’s a fine line between being a fair guardian of that influence and blowing your own horn too much

Spend your "influence currency" wisely

The ability to collaborate with others also helps build your influence because it strengthens relationships. There’s the kind of influence that you build through collaboration, where you work with people.Get to know people on a personal level. It’s easier to relate to and understand others when you have an idea of what’s important to them, what their personality traits are, and what’s going on in their lives. This makes it easier to come together.

Building a strong network is essential

Find ways to give back to individuals and the organization before you try to use your influence for your own interests.Who comes to you to get something that they need in order to do their daily work? The more that you respond to that in a timely way and give them what they’re looking for, the better, stronger influence you’ll build with them.

There is always a way you can help others

Understand yourself and those around you.

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Psychology

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Leadership & Management

Building influence in the workplace

Describing ourselves on paper, while blindly attempting to live up to the expectations of others, makes it all feel like a giant lie.We’re the experts on ourselves, right? So why do we find it so difficult to convey who we are in text?<ol><li> We’re writing to seek the approval of others. Perhaps the worst part is that we don’t know who’s reading our words or who our competitors are.</li><li>For many of us, though, the main reason we find it so hard to write about ourselves it’s so, so easy to procrastinate. </li></ol>

Describing ourselves on paper

3 Pieces of advice to help overcome autobiographer’s block:<ol><li>Forget the pressure you’re under and just start writing. It may not be pretty, but if you let yourself go on autopilot for a while, the words you jot down will be very telling as to which points you find most important to share about yourself.</li><li>Let someone take a red pen to it. Allow someone to sit down with your personal statement. It’ll help to not only get an objective opinion on your writing style and organization but also get an idea of how a friend would portray you on paper.</li><li>Remember that you’re not alone. Literally, everyone who has ever had a job or gone on to post-secondary education has had to self-promote in some way.</li></ol>

Three tips to unblock

If you’ve ever applied for a job, you know how hard it is to write the perfect cover letter that will make you stand out above all the other applicants. It’s a competitive job market, and more often than…

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Personal Development

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Reading & Writing

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Communication

Why do we find it so hard to write about ourselves?

<ul>
<li>EQ means emotional intelligence, our ability to understand emotions and handle them without letting them overpower us.</li>
<li>EQ is a powerful social skill that helps us recognize, understand and distinguish the feelings of ourselves and the people around us.</li>
<li>Money EQ is how we feel about money, and is key to a healthy, prosperous relationship with wealth, no matter how much we have or earn.</li>
</ul>

Your EQ And The Relationship With Money

<ul><li>We need to treat money as our best friend, but we often end up making it our master, or become its slave, allowing it to control us.</li><li>Our relationship with money has its roots in our past and the various experiences that shape our lives. </li><li>Recalling past events or tragedies involving loss of money trigger our negative emotions like anger, sadness, helplessness or inferiority.</li></ul>

Money: Master, Slave Or Friend

If we feel shame concerning money, we may splurge more to cover it. If we feel unworthy of all the money we get, we might feel shy to get what we deserve.If we are passive about money, we won’t care about it and might even avoid it. Due to past traumatic experiences, we can perceive money as dangerous.

Our Negative Emotions And Their Impact On Money

<ul>
<li>Indifferent: These types live life as if they are beyond money, and are usually from wealthy families, or are monks who don’t really need money for their minimalistic existence.</li>
<li>Hippie: These stay away from consumerism/capitalism and feel a strong sense of hatred towards money. They believe money is the root of all evil and corrupts everyone.</li>
</ul>

The Money Personalities: Passive

<ul>
<li>Spenders: They enjoy spending money, and are people who didn’t enjoy wealth in their growing up years.</li>
<li>Savers: They save every dollar and try to spend the least.</li>
<li>Moneymakers: They are the workaholics who try to control money by being a spender or saver as and when needed. They are addicted to money and associate it with everything.</li>
</ul>
There are other personality types too, like gamblers, repressed spenders and worriers.

The Money Personalities: Active

Do you struggle with money? Learn about the key to enjoying a happy and healthy relationship with money explained by Japan’s number 1 money teacher.

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Love & Relationships

Understanding Your Current Relationship With Money - Mindvalley Blog

<ul>
<li>Fashion shifted to high gear in the last twenty years when trends started cropping up faster and clothes became inexpensive.</li>
<li>Shopping used to be an occasional indulgence earlier, but due to online shopping and rising income, it has become a hobby.</li>
<li>Fast fashion is clothing that is cheap but is copied from the trendy designs taken from big fashion brands, celebrities and the catwalk runway.</li>
<li>The newest styles are brought to the market so that customers can buy them while the trend is still hot, at a fraction of the cost of the original.</li>
</ul>

Fast Fashion

Before the industrial revolution happened, fashion was slow, where we had to buy cloth material, and get it stitched. Most of the weaving and preparing of clothes was done on our own.
The sewing machine made cloth making easier and cheaper, and tailors started catering to the middle class. By the 60s and the 70s, clothes became personal expressions, and by the turn of the millennium, low-cost fashion was everywhere.

The History Of Fast Fashion

A few key factors that have the stamp of fast fashion:
<ol>
<li>Thousands of different styles, most of the latest trends.</li>
<li>Short turnaround time.</li>
<li>Outsourcing of manufacturing to cheap, low-wage countries.</li>
<li>A limited quantity of products.</li>
<li>Usage of cheap material like polyester, making the garments non-durable.</li>
</ol>

Spotting A Fast Fashion Brand

<ul>
<li>Use of toxic textile dyes, a sharp increase in water pollution.</li>
<li>The use of cheap material sheds microfibres and increases levels of plastic in the oceans.</li>
<li>Millions of litres of water wastage.</li>
<li>Erosion of soil.</li>
<li>Textile waste filling the planet.</li>
<li>The toxic dyes and plastic waste released in the water is ingested by sea life. Fake fur sold to customers who care about animals is often the real fur of cats and dogs, which is cheaper to obtain than fake/faux fur.</li>
<li>Low-wage workers, often underage, work in dangerous environments and lack basic human rights. They work with toxic chemicals which have a long-lasting impact on their bodies.</li>
</ul>

Impact Of Fast Fashion On The Planet And Workers

<ul>
<li>Fast fashion encourages consumers to shop more and throw away the cheap clothes after a few wears, reaching for the newest trend.</li>
<li>The designers cry about the illegal mass-producing of their creative designs.</li>
<li>Fast fashion creates a constant sense of updating the wardrobe and fuels dissatisfaction.</li>
<li>Millennials have not fallen for fast fashion, and understand that mindless consumerism of cheap clothing is unessential and bad for the planet.</li>
<li>A green movement is underway for sustainable fashion using recycled clothes, which is welcome by the new generation.</li>
</ul>

Impact Of Fast Fashion On Consumers

As British designer Vivienne Westwood says: Buy Less, Choose Well and Make It Last.
<ol>
<li>Buying fewer clothes, and reusing the ones you already own by styling them in creative ways is the first step.</li>
<li>Choose eco-friendly materials, and buy second-hand if possible.</li>
<li>Wear them till they wear out, repairing them when they get torn, and recycling them when discarding.</li>
</ol>

Fast Fashion: How To Help

The fashion industry is a multi-billion dollar industry. Learn more about the way it works

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Society, Arts & Culture

Deep Dive Into The Fashion Industry

20 years ago something changed in fashion. Clothes became cheaper, trend cycles sped up, and shopping became a hobby. Here’s the facts on fast fashion and why you should avoid it.

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Fashion & Beauty

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Marketing & Sales

What Is Fast Fashion?

Many consumers who buy luxury goods are not in a financial position to afford luxury goods. They do not always act rationally and may spend thousands of dollars on a luxury brand that performs the same function as a similar durable item at a much lower cost.
Many people prefer to buy luxury goods, but the price tag can be off-putting. Unless you earn a high salary or have a great personal savings habit, buying luxury consumer goods can be cost-prohibitive.

Buying luxury brands

Humans tend to overemphasize the positive elements of a product and ignore the downsides. For example, consumers wait overnight for new releases of certain products, even though other brands have better features and are cheaper.
One reason is that people view non-luxury goods as inferior simply because they are non-luxury. They also conclude that higher-priced goods must be of better quality, regardless if the goods are better or not.

Why some consumers purchase luxury brands

<ul>
<li>In some cases, purchasing a luxury item can increase self-esteem and give a sense of belonging.</li>
<li>Some people buy luxury goods as a form of retail therapy.</li>
<li>Others reward themselves with a luxury item that they typically can't afford.</li>
</ul>

Luxury goods produce positive feelings

People prefer to pay the full price for an authentic luxury item over a fake one (even if they look identical).
Researchers found that this desire for authenticity develops in childhood. The sentimentality of the item is part of the reason. If you treat yourself by buying a fake brand, it would be the same as not treating yourself at all.

Authenticity matters

Luxury goods exemplify how irrational we can be. A decent, sturdy handbag can be bought for $50, yet people will still spend thousands on a brand name.

The Psychology Behind Why People Buy Luxury Goods

<ul><li>50% of your income goes toward essential expenses: rent, bills, minimum debt payments. </li><li>15% percent goes to retirement savings. They also suggest you increase this by 1% each year. </li><li>5% goes toward unexpected monthly expenses or building an emergency fund.</li></ul>What you do with the rest of the money it’s up to you.

The 50/15/5 rule for multiple financial goals

When you're trying to get your finances together, there's usually a question of trade-off. Do I pay off debt or save for an emergency? Do I save for retirement or a home down payment? Fidelity's 50/15/5 rule addresses the most important financial goals by allocating your paycheck accordingly.

Budget for Multiple Financial Goals With the 50/15/5 Rule

Economic doomsayers have predicted that the ageing populations of industrial and post-industrial countries will be bad for the economy because fewer people will work and contribute to economic growth. More people will collect pensions and demand health care.
<ul>
<li>The United Nations estimates that the share of the populations aged 60 and older will increase between now and 2050.</li>
<li>The number of people aged 60 and over are double in the developing countries to that of the developed worlds.</li>
<li>Countries with increased life expectancy and declining birth rates are raising the average age of the population.</li>
</ul>

The old-age dependency ratio (OADR)

If one assumes that old people are unproductive consumers of government benefits, then a rising OADR can be problematic. But, policymakers only focus on chronological age, while the sociological components of ageing have shifted over time.
Two factors drive average mortality rates:
<ol>
<li>As countries industrialize, they have lower birth rates. Older cohorts of the population will increase in size, and the average overall mortality will rise.</li>
<li>However, people are younger for longer, offsetting the ageing effect.</li>
</ol>

Average mortality rates

<ul>
<li>The ageing effect centres on the negatives associated with the demographic doomsayers narrative.</li>
<li>The longevity effect means if people are leading longer, productive lives, they can make a bigger contribution than the generations before them.</li>
</ul>
Countries that have grown the fastest experienced more sudden demographic transitions and may suffer from a bigger ageing effect that will need to be offset by increased longevity.

The balance between the ageing and longevity effect

The standard chronological measure of age makes less sense because the biological age has changed in relation to chronological age. 
In the US, a 75-year-old today has the same mortality rate as a 65-year-old in 1952. In Japan, 80 is the new 65. This brings a very different perspective on what is happening to OADRs in advanced economies.

Mortality-adjusted indicators

From the perspective of mortality-adjustments, one can see a flawed assumption underlying the conventional demographic doomsayers who don't distinguish between ageing and longevity effects.
A more nuanced approach is needed that reflects the multidimensional aspects of ageing. The average person now lives a longer, healthier life based on income, education, genetics, lifestyle, and environment. There is a growing need for more flexible policies to help older workers live more productive lives.

A policy challenge

Advances in anti-ageing technology could increase people's lifespan to 150. This technology could be beneficial for countries suffering from the ageing effect. 
In countries where the longevity effect is dominant, there will be vast economic and social opportunities. But we have to move away from nominal measures of age that treat older people as a problem. By investing in a longevity dividend, we can offset the threat of an ageing society.

Opportunity Cost Formula, Calculation, and What It Can Tell You

Quitter's remorse: The workers who regret resigning

The Great Resignation is here. Is now the perfect time to quit your job?

Building influence in the workplace

Why do we find it so hard to write about ourselves?

Angela