Opportunity Cost and the Public: A Sliver of Hope

David Henderson

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I'm one of those people who, on a flight, after doing the crossword puzzle and the medium sudoku, occasionally looks at the articles. I do it mainly to get a feel for what writers trained in the medium think Americans will understand.

So I was pleasantly surprised on an American Airlines flight last week from Nashville to Dallas when I read an article in the airline's bi-monthly magazine, The American Way. The article, on golf courses, was written by Larry Olmsted. The article in itself was interesting and well-written. But that's not what I want to focus on here.

Here's the sentence I found interesting:

Courses are expensive to build and maintain, development lending is in short supply and the real estate itself often carries a high opportunity cost, especially for older courses in growing urban areas.

Three things, all positive, are interesting about this:
1. Olmsted used the term "opportunity cost."
2. He used the term correctly.
3. Neither he nor his editor felt the need to explain the term; presumably they both thought that the "growing urban areas" part got the point across sufficiently.

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CATEGORIES: Economic Education

COMMENTS (6 to date)

Latest Comment

HH writes:

Hate to be a pessimist here, but I'd bet that, while Olmsted knew what he meant, his editor and most of his readers read "opportunity cost of real estate in growing urban areas" as "rising real estate prices." I doubt that most people make the connection to alternative uses that quickly .

Posted September 21, 2011 2:26 PM

Carleton writes:

My wife gives IQ tests and one of the questions is why does land cost more in the city than in the country. Pretty much no one gets this question correct regardless of their IQ level. They don't even have to be 100 percent correct. All they have to do is mention supply or demand in some way. So I doubt people really understand the term opportunity cost correctly.

Posted September 21, 2011 5:24 PM

Steve Sailer writes:

Frequent fliers tend to be well above the national median in intelligence and education. Plus, advertisers in in-flight magazines are aiming at the more well-heeled fliers, so editors aim at those readers with more disposable income. Finally, golfers are well-above the national average on most measures. That's why there is so much golf on TV despite it being a hard sport to televise and not very popular with the masses. Notice that the ads on golf broadcasts are aimed at very elite audiences. My favorite was a Boeing ad explaining why you should buy Boeing airliners rather than Airbus airliners.

So, my guess was that this article was there as a hook for running ads alongside from destination golf resorts, and I would bet that, say, half of the people who frequent golf resorts have taken at least Econ 101 in college.

Posted September 21, 2011 6:33 PM

David R. Henderson writes:

@Steve Sailer,
Good points. BTW, what was Tiger’s major at Stanford? Econ.

Posted September 21, 2011 11:48 PM

joecushing writes:

Nobody took econ 101 because beginning econ is a 200 level class.

Posted September 22, 2011 6:17 AM

Larry Olmsted writes:

David

Glad you enjoyed my article, and glad that you, unlike many of my readers, did not take joy in catching me in an error.

Larry Olmsted

Posted September 22, 2011 4:26 PM