In previous posts, we've argued that true valuation is revealed through sacrifice—specifically, what an agent is willing and able to give up in practice. But there is a crucial, often overlooked dimension behind every sacrifice: opportunity cost.
Opportunity cost is the value of the next-best alternative foregone when making a choice. Every decision carries with it the shadow of what you did not choose. To truly understand the depth of someone’s valuation, we must consider not only what they sacrificed but what else they might have done instead.
Consider donating $100 to charity. The true cost isn’t merely the loss of $100, but all the other potential uses of that money—investing in your health, your family, or a future business opportunity. By explicitly accounting for these alternatives, we sharpen our understanding of value: the higher the value of the best foregone option, the greater the demonstrated commitment.
This framework helps reveal hidden inconsistencies and tensions in our values. People often say they value family or health highly but regularly spend time and money elsewhere. The opportunity cost of each hour scrolling social media, for example, might be time not spent exercising, building relationships, or acquiring skills. When we ignore opportunity cost, we mislead ourselves about what our choices actually signal.
Furthermore, recognizing opportunity cost explicitly guides more rational and authentic decision-making. It brings unconscious trade-offs into awareness, enabling us to align our choices more closely with our genuine priorities rather than our professed ideals.
Ultimately, opportunity cost is the yardstick of sincerity in valuation. If you wish to understand your values or those of others, ask not just what is sacrificed, but what alternatives are consciously foregone. Only by facing this hidden dimension can we grasp the real depth of our priorities.