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Opportunity Cost: Beginning, Evolution And A Much-Needed Clarification

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  • Sheetal Bharat

    (BASE university)

Abstract

Having found discrepancies in the definitions of opportunity cost in a few textbooks, I started disinterring its beginning and evolution. The journey, for over two years now, has resulted in this paper. It works along two related lines: i. It makes significant corrections and some additions to received knowledge regarding the beginning and evolution of the concept of opportunity cost. Frederick von Wieser is normally credited with having birthed the concept. The scholars who I credit with shaping and slowly building the concept are Cantillon, von Thünen, Ricardo, Mill, Patten, Macvane, Green, and Davenport, among others in the foundational phases. Further, the LSE scholars have worked extensively on the applicability issues surrounding the concept. Even in the past two decades, scholars have conducted surveys to gauge the level of understanding of the opportunity cost concept among economists, and proposed clarifications. ii. Based on the edifice of opportunity cost so constructed, I propose a schema for calculating it in a way that imbues it with conceptual rigor.

Suggested Citation

  • Sheetal Bharat, 2020. "Opportunity Cost: Beginning, Evolution And A Much-Needed Clarification," BASE University Working Papers 02/2020, BASE University, Bengaluru, India.
    • Handle: RePEc:alj:wpaper:02/2020
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    References listed on IDEAS

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    1. H. J. Davenport, 1894. "The Formula of Sacrifice," Journal of Political Economy, University of Chicago Press, vol. 2, pages 561-561.
    2. Ferraro Paul J & Taylor Laura O, 2005. "Do Economists Recognize an Opportunity Cost When They See One? A Dismal Performance from the Dismal Science," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-14, September.
    3. Daniel M. Bernhofen & John C. Brown, 2018. "Retrospectives: On the Genius Behind David Ricardo's 1817 Formulation of Comparative Advantage," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 227-240, Fall.
    4. Norton-Griffiths, Michael & Southey, Clive, 1995. "The opportunity costs of biodiversity conservation in Kenya," Ecological Economics, Elsevier, vol. 12(2), pages 125-139, February.
    5. Frank H. Knight, 1928. "A Suggestion for Simplifying the Statement of the General Theory of Price," Journal of Political Economy, University of Chicago Press, vol. 36, pages 353-353.
    6. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    7. Mark Thornton, 2007. "Richard Cantillon and the Discovery of Opportunity Cost," History of Political Economy, Duke University Press, vol. 39(1), pages 97-119, Spring.
    8. Michael Parkin, 2016. "Opportunity cost: A reexamination," The Journal of Economic Education, Taylor & Francis Journals, vol. 47(1), pages 12-22, January.
    9. Rebecca Hamilton & Debora Thompson & Sterling Bone & Lan Nguyen Chaplin & Vladas Griskevicius & Kelly Goldsmith & Ronald Hill & Deborah Roedder John & Chiraag Mittal & Thomas O’Guinn & Paul Piff & Car, 2019. "The effects of scarcity on consumer decision journeys," Journal of the Academy of Marketing Science, Springer, vol. 47(3), pages 532-550, May.
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    More about this item

    Keywords

    opportunity cost; pedagogy; evolution; economic thought;
    All these keywords.

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • B19 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Other

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