Opportunity Cost: *The* Key Economic Concept for Programmers

By Sinan Unur
Date: Monday, 3 June 2013 15:05
Duration: 20 minutes
Target audience: Any
Language: English
Tags: cost decision economics making opportunity optimization

Programmers tend to get frustrated by how comfortable people on the business side of things tend to seem living with imperfect code, imperfect technology, imperfect everything.

When normal people hear the word "optimization", they think about improving things, making things better. An economist, on the other hand, thinks only about balancing costs-and-benefits.

Programmers are smart people, who probably took an introductory econ class or two in college and probably had an easy time of it because the math really is not that demanding. The underlying concept of "opportunity cost" does seem to present problems, however.

One can think of the insistence of practitioners of agile methods that stakeholders specify requirements in bite-sized pieces as well as demanding them to prioritize their wants as a way of trying to communicate the opportunity costs (in terms of development time) of one requirement over another.

I propose a talk explaining the standard economic model of choice under constraints with various examples. I hope the concepts will prove useful the next time programmers find themselves perplexed by seemingly unproductive business decisions.

There isn't going to be much programming, if any, but I hope a deeper explanation of what choices entail will help the attendees approach future interactions with various stakeholders in a more productive way.

PS: Examples I would like to bring up include:

http://blogs.perl.org/users/bookingemployee/2012/03/truth-about-bookingcom.html

http://blogs.msdn.com/b/oldnewthing/archive/2003/12/24/45779.aspx

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