Helpful Economics Concepts: Opportunity Cost

Opportunity Cost – The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

Suppose that you are a pastor of a church community with a limited budget.  You can invest X tithe dollars into a program for recovery ministry or you can invest those same tithe dollars into a new discipleship program.  The Law of Opportunity Cost calls pastors to remember a couple of things:

  • You can only spend the tithe dollars on one program.  You cannot double spend the allotted tithe dollars.
  • The value you gain in one program must be measured against the value lost in not starting the other program.
  • Value can be plus or minus.

This is a critically important concept for pastors. Leaders are not often choosing between a good and a bad option — They are choosing between two good options, with one of the options being better than the other.  The key for pastors is to always remember that the goal in decision making is value added to the church.  Thus, with limited resources a Pastor must make the better decision based on which direction will add value, cumulatively speaking, to the church body.
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About Doug Hankins

Although not a Christian in his youth, Doug came to believe in Jesus during his teenage years. When not playing sports or pastoring Doug is probably spending time with his wife, reading a good book, or drinking some hot tea. Doug's first book Dawson Trotman: In His Own Words is available wherever books are sold. You can follow Doug on twitter.
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3 Responses to Helpful Economics Concepts: Opportunity Cost

  1. Jon says:

    Great posting Doug and another huge facet of that econoomics discussion is the opportunity cost of time. Pastors, like many other professionals, often have more demands on their time than humanly possible to attend to.

  2. Deodira says:

    i think it was a great website because it is really interesting.

  3. Agnes says:

    i’m glad we have your blog as a help.

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