Читать книгу Horse Economics - Catherine E O'Brien - Страница 15

Cost-Benefit Analysis

“If you understand the motivation for your decisions, you can make good decisions,” says Ernest M. Swartz, M.S.W., a licensed clinical social worker. According to Mr. Swartz, “balanced” persons “are self-aware and know why they are doing what they are doing.” If you take this rule for your personal decisions a step further and always do a cost-benefit analysis—a comparison of the positive and negative aspects of a course of action—you can make good financial decisions as well.

A cost-benefit approach should be used in all resource allocation decisions. Resources^♦, including both time and money, should only be spent if the expected benefits from using those resources will exceed the expected costs of those resources. Benefits should outweigh costs. In other words, if you spend a dollar, what you’re spending it on should be worth more than a dollar to you.

Let’s say you are flipping through the livestock catalog because you need to purchase fly spray. Do you purchase the economy brand for $4.20 per bottle, or do you purchase the premium fly spray, which lasts ten minutes longer than the economy brand, for $13.50 per bottle? If you don’t ride your horse for very long, or flies don’t really bother him, there is no real benefit gained from spending the extra $9.30 a bottle. However, if you have a horse that goes into a bucking fit when a fly lands on him, then the benefit justifies the extra cost (and you get to dismount in one piece.)