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All Costs are the Subjective Expected Values of Foregone Opporunities

Here’s a letter that I sent yesterday to news-radio radio station WTOP (in DC):

During yesterday’s 1:00pm hour, you played recordings of several listeners who offered their thoughts on U.S. military involvement in Afghanistan.  One gentleman insisted that on matters of national defense “costs should be irrelevant.”

Sounds noble.  In fact, though, it’s childish and dangerous.  The cost of any action is the value of that action’s alternative.  So to ignore costs – as this caller proposes – is to ignore alternatives.  That’s what children are prone to do and what parents are charged with teaching them not to do.

No action should be undertaken regardless of its costs, for the obvious reason that no action should be taken regardless of its alternatives.

Donald J. Boudreaux