Recently I learned of a very nice way to use Fantasy Football to explain the concept of opportunity cost. What a great entry point to learning this is. Opportunity cost is one of the most fundamental concepts in economics. Put simply, opportunity cost is what you give up to get something else. The concept expresses the relationship between scarcity and choice, two fundamental aspects of the world we live in. When governments spend money they must decide where it will go. Some people would like to see it spent on healthcare, others education, and others social protection. A common issues facing governments today is that citizens often wish to live in a low tax country, with world class public services. Unless people are willing to pay for public services (through taxation) it is often not possible to deliver first rate healthcare, education, etc.
Secondary school students probably don’t worry themselves about this scenario. After all, very few are part of the tax net, and fewer still require the use of public healthcare. However, what many do care about is their fantasy football team. For those unfamiliar with this concept, fantasy football is a game where a person picks players from a given league with fictitious money and forms a team. The most commonly used site for this is the Official Premier League Fantasy Premier League. In Fantasy Premier League each player is asked to select 15 players playing in the English Premier League before the season commences. The team can be altered on a weekly basis and transfers made, using the £100 million pounds given to each player at the start of the game. And here is where the economics starts…
15 players are required (2 goalkeepers, 5 defenders, 5 midfielders and 3 forwards). While the prices of players changes based on performance during the year, the values of players going into the final round of matches this season will indicate just how tricky it can to pick a team. As things stand the most expensive players in their positions are presented in the diagram below to the left. The cost of the assembled squad comes in at a cool £135.1 million. Unattainable however, given the budget. Choices must be made. Who should one give up in other to afford someone else? Students might decide they need player of the year Eden Hazard and hence are prepared to replace injury-prone Daniel Sturridge with a less expensive forward. The opportunity cost of having Hazard is therefore a Sturridge or Costa maybe.
The decision facing all Fantasy Football players is like that of government. What should I give up in order to have the things I want most? A great way to teach opportunity cost.