John Taylor has a fun column about opportunity cost, curriculum, and Tiger Woods. As it happens Tiger was one of John’s students during freshman year at Stanford. John says about Tiger:
With Tiger Woods just winning the Tour Championship, I have a wonderful example today of opportunity costs. Tiger took my course in 1996. He was the best economics student: As I have often said, he learned opportunity costs so well that he left Stanford and joined the pro tour.
As John says, it is about the choices people make when faced with scarcity. The stock answer to, “I am a good student. Should I stay in school or follow my dream?” is stay in school. But the back story matters. If you have the proven skills of Tiger Woods
In 1995, he successfully defended his U.S. Amateur title at the Newport Country Club in Rhode Island and was voted Pac-10 Player of the Year, NCAA First Team All-American, and Stanford’s Male Freshman of the Year (an award that encompasses all sports)
Then leaving school in 1996 looks to be the right choice before the fact and obvious after the fact. Here are two of our experiences about advice and opportunity cost. A student comes to our office and says she has a local offer that she likes because it requires less hours but she wants as much money as her classmates that will be working in bigger cities and working more hours. Our answer is that that is the trade-off she wants. She should jump at it.
Another student comes to our office and asks for a couple of days off. We ask why. Our expectations were a wedding or a senior vacation. Instead we hear that he has been invited to the NFL combine. We said yes and he went to the Combine and played in the NFL for several years.
Trade-offs matter. Tiger and the other folks are in the best position to make their own decisions. Those of us that give advice for a living should always recognize that the stock answer isn’t always the best. We need to find out about the individual when giving advice. Exceptional golfing skills, a need to stay local, or ability to make the NFL all change the typical answer. Then, sometimes, we wander beyond the economics to all that other stuff.