Class 16 - Is the Titanic a Sunken Cost?

Today we talked about the margin. The margin is a little bit more or less.

The phrase "Cassie is unselfish" means nothing. It causes the listener to compare it too what we believe is an unselfish person. Someone who knows a saint might believe that Cassie is basically God while someone from a bad neighborhood might believe that Cassie is just someone who won't mug them.

Bruce doesn't release an album every day and men don't say I love you because when they do, the value is so great at the margin. (marginal value).

For example: teachers (water) vs athletes (diamonds).
The skills for athletes are more scarce so at the margin we value athletes more. If 200 of each group disappeared, the athlete group would be more affected (maybe lockouts would happen....) But if there's none of each group, the teachers matter more. Or if there's one of each - we want that teacher more. The total value of the teachers out ways the athletes.
This is why we pay the worker making drugs more than the worker making a bouncy ball even though they might be doing the same work. The skills for the drug guy are more scarce so we value him at the margin.

Then we talked about how oil isn't a resource, but its function is. Like how people pay money for water when it's "free". We pay for the function of having water on the go.

Then we talked about sunken costs - the opposite of marginal costs. No matter how we change our decisions, these costs don't change. They are costs from the past - they are sunk. For example: if Rochester ended the football program, the mortgage on the stadium is a sunken cost - it's already spent, in the past. But scholarships and tickets would be a marginal cost.

Then there's the law of unintended consequences. Seen through seat belts in cars, yes we do save lives but what has happened? People speed more, the cost of driving badly has decreased. The accidents have increased but they are now safer accidents. But who suffers? The pedestrians.