How to Identify Your Most Important Task According to Economists
If you have many tasks that are all equally urgent and important, which one will you work on first? Will you choose randomly?
If you’re into self-help and task management, then you’ve probably heard of the Eisenhower decision matrix (EDM): the four-quadrant matrix that’s extremely useful to organise your tasks.
As a quick reminder, EDM helps you arrange your tasks based on their importance and urgency:
- Quadrant 1: Urgent and important
- Quadrant 2: Important but not urgent
- Quadrant 3: Urgent but not important
- Quadrant 4: Not urgent and not important
But when you have concurrent tasks that are all urgent and important (i.e., more than one task in the first quadrants), how will you pick which one to work on first?
In this case, you need to learn how to select the activity that has the highest impact on your overall improvement, progress, and goal achievement.
Sadly, EDM alone falls short of solving this issue.
Luckily, however, there is a great strategy from economics that can help you choose the most critical task among all critical tasks. This method is known as opportunity cost.
Opportunity Cost — a Step Forward beyond EDM
By definition:
Opportunity cost represents the potential benefits you’ll miss out on when choosing one option over another.
Let’s break down this definition by asking two important questions.
- What’s the cost of letting go of a certain task?
- What opportunity is missed if you pick one task and postpone the other?
Every choice you make has a cost, which is the value of the best alternative opportunity you didn’t choose.
That’s why, when making a choice, you should always strive to choose the task with the lowest opportunity cost.
Once you learn to spot the potential opportunity you’ll lose by letting go of a task favouring another, you’ll become a master at picking tasks with the highest value.
Minimising Opportunity Costs — Real-World Scenarios
Learning to minimise opportunity costs will equip you with a framework for better decision-making in all life areas.
Here are three examples — to illustrate the concept of opportunity cost — from different areas of life.
Example 1 — Learning to speak french
Let’s assume you want to learn french. To do so, you’ve established two high priority tasks to reach this goal:
- Enrolling in a french class.
- Speaking French with a native speaker.
Your french class occurs every Saturday afternoon. Yet, one of these Saturdays, a friend from Paris comes to visit your city. He’s willing to spend the afternoon with you and converse in his mother tongue.
Will you skip the french class to meet with your friend?
You’ll have a hard time making a decision, especially that both tasks rank in quadrant one of your Eisenhower decision matrix (i.e., important and urgent).
In this situation, your best course of option is to run an opportunity cost analysis.
First, let’s look at the opportunity cost of skipping french class.
- You’ll miss important explanations from the teacher.- Need to borrow class notes from classmates.- Struggle to understand some concepts since the teacher isn’t with you to explain stuff clearly.
Next, let’s examine the opportunity cost of not meeting with your friend.
- You'll miss out on a fantastic opportunity to stretch your skills in a real conversation.- Not learning a few essential french slang that school won’t teach you.- Losing the chance to establish future sessions through video calls to keep practising french with your friend and his family.
By outlining the opportunity costs of each decision side by side, you’ll have a far better perception of what you’ll miss by choosing one option in favour of the other.
Example 2 — Home delivery or take away?
Suppose you’re hungry but don’t want to cook. You have two options:
- Home delivery: order for delivery and pay an extra 5$.
- Takeaway: drive 5 miles to the nearest restaurant to grab a bite and head back home.
Which option will you pick? Let’s run an opportunity cost analysis.
- Cost of option 1: Your cost is the price of food + an extra 5$ for delivery.- Cost of option 2: Your cost is the price of food + the gas you’ll burn for driving 10 miles + the extra time you’ll waste travelling to and from the restaurant.
Based on this computation, you can choose the option that suits you best: is 5$ a higher cost than the extra time and gas you’ll lose?
I personally value my time a lot more. In this situation, I’m willing to spend a few more bucks to get home delivery.
Example 3 — Making smarter decisions with your money
Finance is where opportunity costs analysis truly shines.
Suppose you have an investment that’s returning 10 per cent per year on average. You decide to pull some profits and reinvest them elsewhere.
Whatever you choose, opportunity cost tells us that you ought to be sure that you’ll make at least 10 per cent on your future investment; otherwise, you could easily make that amount by keeping your money in the same asset.
Thinking about opportunity costs pits your investment options against each other; you can make a more educated choice among the array of opportunities available to you.
Take Away
Whenever you’re having a hard time choosing among equally important tasks, run an opportunity cost analysis: “what cost am I going to pay if I don’t do this right now?”
When you run an opportunity cost, you’ll know exactly the value associated with each task, e.g., time, money, people involved, etc.
Work on the task with the lowest opportunity cost first.
Once you understand the cost of missed opportunities foregone by choosing one option over another, you’ll get smarter at making decisions.
Whether it’s homework, daily job, or even business and finances, opportunity cost will turn you into a champion at picking the right tasks and do the most valuable daily work.
Make a raucous!
