show menu

Econ 101: What’s it cost to live in Sonoma County? (Like, for real?)

I know that I’ve promised that economics is fun and easy. I also know that so far, I’ve only thrown vocabulary at you all which isn’t very fun or easy at all. We’re still doing the vocabulary. I promise though after this one we’ll get into some good meaty topics, but for now, we’re going to talk cost.

We are all familiar with cost. How much did your shoes cost? What is the cost of a new hot water heater? We pay bills and buy stuff. We all know what cost is. Right? Well, sorta. When we talk about cost, we’re often talking about how much money is exchanged for stuff, but as usual, there’s more to the story than that. Usually, when we think about cost we’re thinking about something that economists call accounting cost. Accounting cost is the actual monetary amount that we spend on stuff. We all know about this. We don’t have to go into detail.

“Woah woah woah! Hold the phone,” you say. “I thought we weren’t doing math and ledger sheets and models. I thought economics is everything.” To which I respond, “Argh! You caught me. Old habits die hard” Yes. In our Western, industrialized, go hustle, pull yourself up by your bootstraps culture, everything can be monetized. Every. Single. Thing. So let’s reframe thinking about accounting cost as not just money spent, but all resources spent, time, energy, space, money, all resources.

Moving on, the other cost that economists talk about is opportunity cost. To make it very simple, and this is going to make some economists cringe and twitch, opportunity cost is what you didn’t do. Here’s what I mean. If you remember from last time, scarcity rules our world. All resources are finite and our desires for them are not. We have to make choices every second of every day about how we use these resources. In the world of economics, the stuff we choose not to use our resources on is called opportunity cost. Here’s an example. This morning, I stayed in bed an hour later than I had planned. The accounting cost of that was one hour of my time. What I got for that cost was a warm cozy bed and puppy cuddles. What I gave up to have cuddle hour was time to clean my incredibly filthy house and get a little exercise. The cost of those cuddles wasn’t just the hour of my life, but the stuff I could have done with that time other than cuddling. Please trust me when I say this, it was worth every second.

When you put both the accounting cost and the opportunity cost together, it’s called the economic cost. There’s a lot more to this conversation and it will come up all the time from here on out. Just remember the cost of something is two things, 1. The resources you spent on that something and 2. All of the other somethings that you didn’t spend those resources on.

Now you know what it means when economists spout their favorite adage, “There’s no such thing as a free lunch.” Not only do you have the accounting cost of all the things that provide the lunch whether you’re paying money for them or not, someone somewhere is expending the resources, you also realize that the cost of that lunch is all the stuff you could have done with those resources instead.

That’s a quick and dirty overview of costs. I do have one last cost related concept that I want to leave you with that you won’t find in any economics textbook. There are two things in this world of ours that don’t cost one damn red cent and those things are compassion and kindness. Let’s all make sure to spend that currency freely this holiday season and be excellent to each other. I can’t wait to see you in the new year.

We've moved our commenting system to Disqus, a widely used community engagement tool that you may already be using on other websites. If you're a registered Disqus user, your account will work on the Gazette as well. If you'd like to sign up to comment, visit
Show Comment