The concept of opportunity cost is central to benefit-cost analysis and generally not understood by non-economists. Previously we explained how the opportunity cost of regulation differs from expenditures on regulatory compliance. We are building a list of real-world examples that show why this concept matches up with common sense.
On April 17, Wall Street Journal reporters Greg Jaffe and Neil King Jr. published a Page One article (subscription may be required) concerning conflicts between certain senior military officers and Defense Secretary Donald Rumsfeld. The conflict appears to concern Sec. Rumsfeld’s longstanding plans to transform the services into “faster, streamlined forces to make warfare more efficient.” These issues transcend matters related to the wars in Afghanistan and Iraq.