Essay on Opportunity Cost
Posted on November 3, 2010 by
Opportunity cost provides a broad view of the monetary and nonmonatary factors in making a choice (Hall, 2000). This paper examines the concept of the individual opportunity cost for pursuing a Master of Business Administration (MBA) degree. It suggests that acquiring an MBA part-time while employed, as compared to a full-time student, minimizes the payback period for the cost of education at the expense of the non-monetary demands on time, energy and family.
The paper specifies the common elements involved in making the choice between taking a leave of absence from work, moving out of town, and pursuing an MBA full-time, or maintaining a current job while enrolled in a local MBA program. It then compares and contrasts the options and finally concludes the paper with a suggested choice.
Opportunity Cost Elements
Hall and Lieberman define opportunity cost as “the value of the best alternative sacrificed when taking an action (pg. 16). They suggest every choice is a sacrifice. Yet, to what degree must a sacrifice be made between a choice of “learning while earning” and “learning while paying?”
German philosopher Friedrich Nietzsche once wrote, “When there is a choice about it, a great sacrifice is preferable to a small sacrifice, because we compensate ourselves for a great one with self-admiration, which is not possible with a small one” (Columbia World of Quotations, 1996). Acquiring an MBA, regardless of the choice of options, requires a great sacrifice. It is unavoidable. Nevertheless, a careful examination of choice elements, namely money, time, energy, and family, may minimize the degree of sacrifice (MBA.org.nz, 2002).
Considering the money element, Silberman writes, “in calculating the value of an MBA, one needs to consider what economists call ‘opportunity cost,’ the lost wages you would be earning while in school.” He continues, “you need to count the cost of the ‘next best’ alternative…. in...