I have a feeling people talk about tradeoffs with a bit too much confidence, as if they understood how easy it is to make a tradeoff. I feel this because I think I am one of those people. I talk about tradeoffs all the time; tradeoffs we need to make in our business, in my wedding plans, and on weekends. The amount of times I mention them, you’d think I had a keen appreciation about how tradeoffs are made. I don’t.
The problem I mostly make with tradeoffs is that I assign them as a negative but mandatory result of something that has already happened. They are lumped together as an ongoing stream of negatives for some decision or change previously made. The reality is that a tradeoff is a side effect of any decision being made in the current moment. The point of thinking through tradeoffs is to weigh the decisions for side effects that could result because of that decision.
A side effect is a consequence of a decision that happens in parallel, or in addition to, an intended effect. For example, the side effect of a drug intended to attack cancer cells is the loss of hair. Because both the cancer cell and the hair cell are fast-growing, scientists understand that attacking one will inevitably harm the other.
A decision-maker is faced with a trade-off when the beneficial effects of a proposed intervention must be weighed against the side-effects of that action. So, continuing the analogy, a cancer patient must understand the trade-off between the intended impact of chemotherapy and its numerous side effects, including nausea and hair loss.
Decision theorists emphasize, too, the deleterious impact of what are called revenge effects. A revenge effect is evident when an initiated action results not in “side” or parallel consequences, but effect the situation in exactly the opposite direction of that which was intended. A cancer treatment so harsh that it causes other equally harmful cancers to occur is a revenge effect.
What’s most important about this is that those side effects represent opportunity costs. Whatever the side effect you create is the opportunity cost for your decision. It’s necessary that we understand every tradeoff has an explicit opportunity cost to it. That cost should be calculated, and measured against the decision about to be made. When I try to justify my decision, and simply tell myself there are tradeoffs to it, I should understand what those tradeoffs are, and what the costs are. I’d be a lot better off if I did.