I still remember one of my first days at uni, when I was an undergraduate. They were trying to teach us how to think as an economist would, and this was a typical example:

“What do you do if you are in a cinema watching an awful movie?”

Well, for an economist, the answer is simple. Without thinking it twice, the economist would stand up and leave the venue. Why? The line of reasoning is also simple, and it is deeply embedded in the economist’s “hard disk”: The price of the ticket is a sunk cost: there is no way of having it back. However, the opportunity cost of the leisure time is equal (by definition)to the value of the best alternative use of that time(namely having an ice cream, or going for a walk, whatever). Given that the opportunity cost is usually higher than the sunk cost and the awful time you’re having by watching the movie, you decidedly leave the cinema. This is a quite practical way of reaching a decision and it does have some logic inside, wouldn’t you think?

This is just one of the many examples of how economists can approach reality, and sometimes they do amaze me. I already mentioned this here when I was talking about this abstract development class. Now economists are trying their hands at explaining human behaviour by having a more open attitude, not by imposing alien concepts (as the sunk cost or the opportunity cost) but actually trying to observe what people think in any kind of situations that might have a relevant economic interpretation.

The funny thing is after 6 years of Economics studies, and one of economic practice… I have never left the cinema.

*Have you? Would you ever think about this sunk cost and opportunity cost before living?*

Because this economic way of thinking constantly amazes me,

Economics scores a point, so it’s 2-2 vs. other fields.

(The picture will come another day)