Opportunity Cost There Are Four

Opportunity Cost There are four opportunities on the table. They appear to be mutually exclusive, so each represents an opportunity cost of choosing one of the other options. The first option, the new stadium, would provide a short-term boost in temporary jobs. It is unlikely that many new permanent high quality jobs will be created, since the team is already creating those jobs at its current location. Thus, most of the benefit will come from the construction jobs.

The government must also weigh the potential losses in GDP that may arise should the team relocate. The main opportunity cost here, though, is that this money will go to temporary job creation at the expense of more strategic, long-term objectives. The education option holds a number of different assumptions. The first is that increasing teacher's salaries will improve student outcomes. New school facilities and higher levels of accountability, however, probably will increase student outcomes.

In the long-run, a better educated workforce is likely to create better jobs, and is more likely to contribute to economic growth in the future. These benefits in the long run, with the costs today, so the main opportunity cost here is that the benefits are vague, unknown and far in the future whereas other options provide more immediate benefits. The transportation option will create new construction jobs, so in that respect there is no opportunity cost vis-a-vis the stadium option.

An upgrade to transportation infrastructure should result in improved economic performance. While the payoff is going to be long-term, it is potentially as great as having an educated workforce. It is doubtful that the region will be a more pleasant place to live -- one cannot build highways to alleviate sprawl and traffic problems. In the end, those new highways will be just as congested as the current ones. This option appears to fill the benefits of both the stadium and the education options, at least in the short run.

The long-run benefits of more highways are questionable, whereas the long-run benefits of better education are not. The no new taxes option argues that by keeping taxes low. There are some perceived benefits of this -- for example lower taxes attracting business and investment. It is questionable the degree to which a temporary half-cent sales tax increase would hurt business investment, however. In addition, the opportunity costs of two major long-term infrastructure projects in education and transportation should be considered.

Economic growth throughout the world has been predicated on the provision of infrastructure such as improved transportation and education. It is not reasonable to assume that future investments need not be made. An inadequate highway system and uneducated workforce could undermine the benefits.