One of the first lessons in economics is that an individual should take an action if and only if the benefits are greater than or equal to the costs. Now, the costs of an action are often times very difficult to estimate because they go beyond the price of a good or service. In economics, we define the opportunity cost of an action as the value of the best alternative that is forgone or what you have to give up in order to take the action. In class, I always use the example of Ben & Jerry’s “free” ice cream day to talk about opportunity cost. An individual still incurs costs to get to the Ben & Jerry’s and has to take the time to obtain the “free” ice cream (in fact, the opportunity cost can be quite high depending on the line to get the ice cream and who is standing in line with you).
Even without an economics class, I bet Trayvon Reed has started to learn about the concept of an opportunity cost. Last week, Mr. Reed visited a 7-Elven and “allegedly” stole a few items totaling just under $6 (http://thebiglead.com/2014/08/04/maryland-trayvon-reed-arrested-for-stealing-twix-ice-cream-bar-terps-pull-scholarship/ ). So we can estimate the benefit of the theft to be around $6. Unfortunately for Mr. Reed, there were two officers (not in uniform) in the store who witnessed the theft and confronted him after he left the store. Reed attempted to flee and a “scuffle” broke out. So, for the expected benefit of under $6, Mr. Reed is now charged with second-degree assault, second-degree assault of a police officer, resisting arrest, and theft of under $100. This would be a terrible cost for anyone. However, Mr. Reed is not just anyone, he is an 18 year old who is 7 foot 1 and who was awarded a scholarship to play basketball at the University of Maryland. Not surprisingly, the scholarship has been withdrawn.
When trying to estimate benefits and costs of an action, sometimes it is relatively straightforward. In this case, even with a relatively small probability of being caught, the expected cost had to exceed the expected benefit. So, why did Mr. Reed take this action? I suppose only he would know. Maybe he did not consider the opportunity cost. However, even without the loss of a scholarship, the charge of theft hardly seems worth $6. My hope is that Mr. Reed will serve his punishment and get his life back in order. Maybe someday he will end up in an economics class and be able to explain the concept of opportunity cost to his classmates.