"opportunity cost" conception---Who came up with it?

[bcyclwutztht]

It was an Austrian, no?

[Esuric]

Yes. Friedrich von Wieser.

[BrianAnderson]

Not that Wikipedia is always correct, but… [link]

[bcyclwutztht]

Yes. Friedrich von Wieser.

Not that Wikipedia is always correct, but…

Wiki:

…The concept of an opportunity cost was first developed by John Stuart Mill.

lol. Good grief, does EVERYTHING have to be controversial?

[Solid_Choke]

Wikipedia says J.S. Mill; Jasay credits Bastiat; Otteson claims that Smith was the first.

[bcyclwutztht]

ok, a search of “opportunity cost” at Mises.org turns this up…

Richard Cantillon and the Discovery of Opportunity Cost, by Mark Thornton.

Thornton argues—of course!!—that Cantillon oringally conceived of opportunity cost. I haven’t read the paper, so I don’t know his argument. On the “Weiser vs. J.S. Mill” origination issue, it looks like it begins with Stigler…

(Stigler): Menger lays the groundwork for a correct theory of productive organization—i.e., for the determination of the allocation of resources. The final development, however, the theory of alternative cost, is left for Wieser to formulate.

…

(Thornton:) Later, in an act of academic self-flagellation, Stigler found that John Stuart Mill understood the concept of opportunity cost in 1848…

Didn’t know this was a whole thing. Wow, so many knowledge gaps in economics.

Edit: The trouble seems likely due to different historians/observers, when referring to this issue, fail to distinguish between: on the one hand (a) the first formal theoretical statement and definition of opportunity cost (or some such term) in the history of economic thought; and on the other hand (b) the first INFORMAL (and/or incomplete) discussion of the idea.

Just like I did here with my OP. In my case, I just assumed that the original conception and the formal definition arose together.

[thelion]

1. Cantillon used opportunity cost, in the sense that a student foregoes wages while getting ability to work in a more complex job, and so that is why that job pays more

2. However, Cantillon did not make a theory of opportunity cost, and his essay, written in 1730, was only published in 1755.

3. Ettiene Bonnet de Condillac, in Appendix on Freedom to his Treatise on Sensations, published in 1754, builds opportunity costs literally as “regret cost” into the basic reason why people make the choices that they do, while they are guided by expected pleasure and pain.

4. Condillac posits a statue, just gaining the use of senses of sight, taste, etc, etc., the moment after it makes its first behavior by reflex of nerves and sensory organs, it afterwards has memory and may choose what to do next: do nothing, which is now a conscious action, or move to attempt to consciously repeat the formerly unconscious behavior, because it remembers the pleasure or pain it got from the action, and uses it to compare the options.

5. Thence, as soon as memory exists, and the first behavior is done, all further behaviors in a person are actions (this is the sense Mises used action–even nonbehavior is a conscious decision at that point).

6. Having acted, afterwards, the cost is not merely physical, that is, the pain it recieves from wrong action, but also the foregone pleasure that would have been the next best alternative must be remembered and regretted.

7. All costs are subjective, and in every action, a thinking subject expects a particular cost to an action, and prefers the pleasure of the action to the cost.

Condillac’s Appendix is basically equivalent to much of Mises’ human action insofar as why is determinism compatible with human action and what makes human action different from reflex (Condillac says habit or unintentional behavior).

8. In 1776, Condillac uses the concept in his economics book, but he had already made a long discussion of the subject at the core of his analytic philosophy.

[bcyclwutztht]

here’s excerpts from wiki:

Condillac is important both as a psychologist and as having established systematically in France the principles of Locke, whom Voltaire had lately made fashionable. In setting forth his empirical sensationism, Condillac shows many of the best qualities of his age and nation, lucidity, brevity, moderation and an earnest striving after logical method.

…

Economics
Condillac’s ‘Le Commerce et le Gouvernement’ (published in 1776, the same year as Adam Smith’s Wealth of Nations) attempted to place economics in a coherent logical framework. He was a friend of friend François Quesnay, leader of the Physiocrats. Much of Condillac’s work reflected mainstream Physiocrats, particularly his analysis of the structure of taxation and proposals for the revival of the economy, but he also proposed another line of argument, claiming that producers work to obtain utility. Most physiocrats rejected utility and the idea was ignored until his ‘rediscovery’ by Stanley Jevons and Carl Menger in 1871.

In his theory of “vrai prix” [true price]. Condillac proposed a theory of human history divided into two phases: progress and decline. Progress is marked by a rational development and use of resources; decline is precipitated by bad behavior from the upper classes that then trickles down to the workers, encouraging excess, luxury, and false prices that harm the masses. Condillac saw the remedy to this as “vrai prix,” a true price created by the unimpeded interaction of supply and demand, to be achieved by complete deregulation. People would be taught to work toward their best interest in an open market through a reshaping of their perceptions. By advocating of a free market economy in contrast to the prevailing contemporary policy of state control in France, Condillac influenced classical liberal economics.

I think he was onto something. Seriously, though, Condillac seems pretty cool.

[thelion]

Yes, Bonnet de Condillac had a whole list of entirely modern understanding of things that harm commerce. He is much more free market than Adam Smith. For instance, he believed any taxes on wages are, as they are indeed, an order to work less, and suggested, if any taxes at all, flat tax on property (land in his time) as payment for its defence, no more no less.