Cost-Benefit Analysis In Daily Life

I thought it might be helpful to drop a quick note about cost-benefit analysis. I’ve made a reference to this idea several times, and more often than not I’m met with blank looks, confused looking eyebrow crinkles, or in rare cases a “What’s that?”. Cost-benefit analysis is something that you do every day. Everyone does. Most of the time, it happens in the background of our minds and we don’t even realize it. But just for fun, let’s break it down…

So what is it?

In it’s most basic form, cost-benefit analysis comes down to “is it worth it?”. It’s the act of measuring both the costs and benefits of a situation/product/relationship/thing and weighing them against one another. If the benefits are greater, we move forward. If the costs outweigh the benefits, we move on. You can see this all the time at the grocery store. Folks inspecting produce, comparing prices, looking for coupons. If it’s not worth the price, we put it back and move on.

But it’s deeper than that. What about deciding whether or not to use coupons? Some people spend hours on end looking for coupons, cutting them out or saving to their phone, organizing them. They plan their grocery list according to their coupons. Some people weight the time cost of couponing against the savings and decide it’s not worth it. But if you have more time than money, it may be that clipping coupons is well worth the time cost.

How does this apply to me?

It’s everywhere. But just for a simple example, you have a graphic. High quality, big file. The image may look amazing, but first load will be slow. So, does the increased load time outweigh the image quality? Maybe not. Maybe we optimize the image and try again. Less quality, less load time. If it’s too much, it’s not worth the speed for a crappy looking graphic. This back and forth is the heart and soul of cost-benefit analysis.

We’ve talked about several subconscious examples of this being used. Let’s talk about some practical, conscious examples. Let’s say you’re just getting started in your career. You’re looking for a mentor. You’re looking for a growth environment. But the work environment is awful. The boss is a jerk who doesn’t understand software development life-cycles. The pay is lousy. The guy sitting next to you smells like onions. But for now, you soldier on. Because you are lucky enough to have found that mentor. You’ve found a place where you can grow. Eventually, there will come a time when the potential for growth and development no longer outweighs the negative environment. When that happens, it’s time to move on.

I’d talk more about how to leave a job the right way, but that’s a conversation for another time. For now, let’s leave it at that and see if we can spot some interesting ways that we use cost-benefit analysis in our daily lives.

Much love!

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