opportunity cost

According to the CDC, 1 in 68 Children are Autistic

July 23, 2015 By Will Lipovsky Leave a Comment

According to the Centers for Disease Control and Prevention, autism is becoming more and more prevalent:

1975: 1 in 5,000 children were diagnosed with autism
2002: 1 in 150
2012: 1 in 68

That’s a roughly 65 percent increase between the year 2000 and 2010.

What does this mean for our children? What does this mean for our wallets?

What’s coming out is that more kids aren’t being born with autism, it’s rather the way we diagnose the disorder that is changing. That’s a relief. At least our population isn’t all suffering from a rapidly spreading disorder. So kids are basically the same as they were when the first study was conducted in the 1970’s. However, the world has changed. Since we diagnose so many of these kids, we are seeing the financial impact. Autistic children are children with special needs. Those special needs cost money to manage.

Special education enrollment figures show a 97 percent increase in enrollment between 2000 and 2010. This would be alright except we’re simply sending more and more kids into expensive programs instead of dealing with the student body as a whole. With so many children being diagnosed, one must ask if regular classroom shouldn’t just be built to better handle the many children who have autism.

A study conducted by the Special Education Expenditures Program (SEEP) outlined that the price tag of educating a special needs student is between $10,558 and $20,000. Whereas, an education without costs $6,665. Mothers and fathers who hear their kid has autism will push them to be placed in special needs classrooms. After all, they are just looking out for their children. The (possibly) over-diagnosis of Autism can have major repercussions on the US tax system. Many school budgets aren’t able to keep up with the ever-increasing diagnosis of this disorder.

According to a recent study from JAMA Pediatrics (funded by the nonprofit – Autism Speaks), the lifetime costs of a person with autism can exceed $2 million. The study takes into account everything. It includes medical, educational, and residential costs as well as lost opportunity costs such as lower employment wages. It’s really a study about what society is losing by having so many people diagnosed with Autism.

What’s especially worrisome is that many people being diagnosed today would not have been diagnosed years ago. Would those other people be more or less productive had they been diagnosed. It’s dangerous to diagnose a person unnecessarily as doctors may be doing today. All through life, they may feel inferior to people without these special needs. Autism may just become an excuse for them when they are feeling lazy. They may use it as a crutch. Alternatively, going undiagnosed could lead to confusion, depression, and a low self-worth.

What needs to happen is more accurate diagnoses needs to happen. This will not only help people live fuller lives but it will likely also help taxpayers. Funding an education system where 1 in 68 kids need an extra roughly $10,000 to finish school is a lot to ask.

If your child has autism, the JAMA Network cautions you not to overreact. They say it’s important to realize many of these costs are societal, indirect costs. The $2 million won’t necessarily come out of the parents’ pocket.

Do you believe the way we diagnose autism is correct?

5 Do-It-Yourself Services You Should Leave to the Professionals

November 6, 2010 By Guest Writer 6 Comments

Many people are tightening their belts in these uncertain economic times. One of the first places we often look to save money is finding projects around the home that we can do ourselves rather than calling the professionals. All do-it yourself projects are not created equal, though, and there are times when you are better off calling in the professionals rather than potentially causing more problems by doing it on your own.

Economists refer to “opportunity cost” in situations like these. Simply put, opportunity cost is “The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.” Before you decide to tackle a project yourself, it’s a good idea to consider what the real cost of doing it yourself is. For example, what will it cost you as opposed to calling a professional? If the professional won’t cost that much more, it may be worth it to allow him to do it. What will it cost you if you mess something up or if something goes wrong later? If you need to call a professional in to fix a botched job it will probably end up costing more than if you had called the pros in the first place. Additionally, there is no warranty on the work you did, so if something goes wrong later you will be footing the bill, whereas many professionals will guarantee their work for a certain amount of
time.

With those things in mind, let’s look at some projects that may be better left to the professionals:

Moving: Not only is the economy uncertain, but many of us are looking for new jobs whether due to downsizing or company closings. Often it is easier to find a job in another area so relocation may be necessary. Skip the headache of doing it yourself for the move and find yourself a good mover who will load you up and move your belongings. When making this decision it is important to consider all of the costs involved, including finding help on both ends of the move (if you don’t know anyone in your new city, you will probably need to hire movers to unload you). Other costs to consider are truck rental, fuel for the rental truck, the logistics of moving other vehicles, and travel costs such as food and lodging. It may take you twice as long to make the trip in a truck, meaning more meals and hotel stays than if you just paid professionals to make the move. Time is also a factor you will need to consider if your moving for a new job.

Garage Door Maitenance: If you’ve ever had a garage door opener stop working you realize how much we have come to rely on this relatively simple piece of equipment. While this may seem like an easy job to do on your own, there are many things that can go wrong which makes this an ideal candidate for making the call to the professionals. Keep in mind that one of the main pieces of your garage door assembly is tightly-wound high-tension wire that can be very dangerous if not handled properly. Calling a professional who replaces or installs openers on a regular basis is a good idea in this case.

Laying Sod: There’s nothing nicer than a well-maintained and nice-looking yard with healthy green grass. One of the easiest ways to get that lawn in the first place is to buy sod. Laying sod is hard work that will leave you wishing you had hired the pros to do it for you. This is a project which is also time-sensitive, so unless you have lots of time to burn, you are better off skipping the DIY and having it done for you. If you don’t get the sod laid quickly it will dry out and you will lose a chunk of your investment. Professionals will take care of the prep work for you – digging up the old lawn, getting rid of rocks and debris, and leveling the ground – as well as laying the new grass. Leave it to the pros and enjoy your nice new grass.

Kitchen Cabinets: When it’s time to remodel your kitchen, leave the cabinets to a professional. The upper cabinets, in particular, can be a nightmare, especially if they are not done correctly in the first place. Potential problems with this project include cabinets which are not level or even with one another and cabinets which don’t fit flush against the wall or corners. Cabinets are also heavy and can be unwieldy to deal with. Pros have the know-how to get the job done quickly and correctly and, if something isn’t correct, most good installers will have a guarantee and take care of any problems that may arise.

Installing a Skylight: Skylights are great for lowering your electric bill, if they are installed properly. There’s nothing better for your bill than to be able to keep an extra light off during the day, and being able to see the stars twinkling in the sky from the comfort of your home at night is a great treat. But there is nothing worse than an improperly installed skylight that has poor insulation thus increasing your heating and cooling bills or, worse, one that leaks. Call the professionals and let them do all of the measuring, cutting, and installing and save yourself many headaches later.

It is great when we can complete projects around the house on our own and save money while experiencing that feeling of accomplishment, but there are clearly jobs that are better left to those who have the knowledge, experience, and tools to get the job done quickly and correctly.

*** Isabella York is a mother dedicated to living prudently but not giving up her life in the process. Along with raising her son, she works for Balsam Hill, a purveyor of Artificial Christmas Trees.

An iPhone Money App That I Would Buy

November 27, 2009 By Jeffrey Strain 2 Comments

I don’t have an iPhone (I don’t even have a cell phone, but that’s a whole other story), but if I did, I would definitely buy the Opportunity Cost of Money iPhone app. This iPhone app makes the cost of your purchases concrete.

Basically, it’s an iPhone app where you list all of the things that you buy that give you the most pleasure and the costs of those things. Then when you are getting ready to make a purchase, you can input the price into the iPhone app and it will tell you the cost in terms of those things that you find most pleasurable.

For example, maybe you love Sees candy, Jamba Juice and personal pizzas. One day you are shopping and you find something for $50 that is screaming at your impulses to buy. before you buy it, you input the $50 price and the iPhone app which will tell you that the impulse purchase would cost a box of Sees candy, two Jamba Juices and 3 personal pizzas. It turns all your purchases into the things that you love the most so that you can judge whether or not the purchase you are about to make is something that you really want to buy. Brilliant!

Do you think that a device like this would save you money?

Understanding Opportunity Cost

June 8, 2009 By Jennifer Derrick 2 Comments

Many times, when I help someone with their finances, I discover that their biggest obstacle is that they don’t understand opportunity cost and the impact it has on personal finance. In order to take advantage of an opportunity, something else must always be given up. Opportunity cost is basically what you lose by choosing one opportunity and giving up the next best choice. For a basic example, let’s say you can choose between buying a meal out or putting $20 in savings. Each choice has benefits and drawbacks. If you choose the meal, you will likely have a good time, eat good food, and get a chance to relax. If you choose to save the money, you give up that good time and good food, but you get the chance to earn interest on that $20, giving you more money in the future. Either way you stand to gain something and lose something: Gain a good time, lose the interest that $20 could have earned. Gain interest (hopefully) on $20, lose that good time. Every time you make a choice, you’re weighing the opportunity cost of that action.

Opportunity cost is even more important when you face big financial decisions. Rent a home or buy one? One comes with the potential to gain value as an investment, but it also comes with added responsibility and expenses. The other will not gain value but will require less time and money over time. Your opportunity cost here is the loss of potential investment gains if you rent versus the loss of time and additional money you incur if you buy.

Go to college or go straight into the workforce? One will be very expensive, but will hopefully yield higher earnings over time. The other choice lets you start earning money immediately, but you may come to a point where your earnings cannot increase without that degree. Your opportunity cost here is the loss of potentially higher earnings if you go to college versus the four years of additional income you will make if you don’t go to college. In any situation, which one you choose depends on how much you value the opportunity that you choose versus the one you must give up.

Normally all this goes on unconsciously. You may get out the paper and pen and make pro and con lists when faced with big choices like buying a home, starting a business, or going to college, but most of our day to day decisions aren’t made with a full appreciation of opportunity cost. We just look at the checking account, see that we have money and buy the new shirt or go out to eat. We don’t think about the things that we must give up when we make those decisions. In fact, most of us aren’t even aware that we are giving anything up. If the money is there, it must be for spending, right? Anything else that that money could do for us seems so far in the future it doesn’t register.

And this is where financial problems begin. Sure, sometimes you just really, really want that particular shirt or handbag. And it’s okay, within reason, to give in to those desires occasionally. If you’re certain that the handbag or shirt is worth more to you than the interest you could earn, the investment you could make, or the other things you could do with that money, then you’re making the decision that’s right for you. Sometimes the things you want in the here and now are worth more to you than future earnings or purchases. (Although you might not see it that way in ten years, but that’s another story.) And that’s okay. If you only look toward the future, you’ll miss out on a lot of things that are fun in life today.

The problems begin when you never look at what else you could do with your money. When you buy things blindly or make big life decisions without considering the opportunity cost, you’re likely to find yourself making decisions where the opportunity cost doesn’t come out in your favor. Let’s say you decide to buy a home. You’ve considered the pros and cons and you decide that the potential upside of buying is worth more to you than any upside that renting could bring. Great. So you start looking at houses. You decide to buy one that’s about $50,000 more and 1,000 square feet more than you originally planned on. The bank will give you the money, so it’s no problem, right? You know that buying is the better choice for you, so you get ready to make the purchase.

Stop. Consider what you’re giving up if you choose that bigger, more expensive house. You will be giving up lower utility bills, lower monthly payments, lower insurance costs, lower taxes, and lower maintenance costs. You might be giving up the chance to pay off the mortgage in fifteen years versus thirty, which could save you tons on interest and give you the chance to do even more with your money. The bigger house will give you more space and possibly a larger investment return, but are those potential upsides worth more than the other additional costs you will incur? You may decide that indeed they are and go ahead and buy the bigger house. Or you may decide to go with a smaller one. Either way, awareness of the opportunity cost of the choice you must give up will generally yield better financial decisions than making blind assumptions.

It sounds like a drag to think about opportunity cost every time you want to buy a candy bar or some shoes, doesn’t it. But that’s exactly what you have to do in order to make the best use of your money. You cannot go through your financial life on autopilot, assuming that the choices you make today don’t have costs in the future. You have to understand that when you purchase one thing, you are giving up other choices that might have been better. While you can’t know everything that will happen in the future, you can have a good general idea of the impact your choices will have. The good news is that once you practice being conscious of the opportunity costs for awhile, it becomes easier and more subconscious. You don’t have to actively think about the tradeoffs of your choices as much. You will eventually be able to make decisions that take those costs into account without it being a big production. And that’s when your financial life will start to take off.