Opportunity Costs

I posted once about how much meetings and reading useless emails cost universities: the hourly salary-rates of everyone engaged in this, times the number of hours it takes.  So an hour long meeting, with 10 people making $50 an hour, is a $500 meeting.

Of course, the university does not pay $500 extra for this meeting, so how can it be said to cost the university anything at all? What we are really saying is that the cost of the meeting is the equivalent $500 taken away from something else. It is $500 less research, for example. Now you might think that the faculty members can just work an extra hour on their own time to make up for the meeting. That is true up to a certain point, but people will say they are too busy to get to their research during some weeks.

This is known as an opportunity cost. So the problem is not, say, that watching tv is bad, but that it takes the place of some other activity that would be better. What would you be doing otherwise? All the special initiatives, all the wonderful projects that are not teaching and research, cumulatively end up sapping away resources from the primary mission of the university.