Opportunity Cost and Hidden Inventions1
The Freeman: Ideas on Liberty
By Dwight R. Lee
Dwight Lee (firstname.lastname@example.org) is Ramsey Professor at the Terry College of
Business, University of Georgia, and an adjunct fellow at the Weidenbaum
Center on the Economy, Government, and Public Policy at Washington
University in St. Louis.
Few people think about opportunity cost as systematically as economists do, but
all of us are constantly guided by the opportunity costs we face. If, as you are
reading this article, you learn that someone a few blocks away is giving $1,000 to
anyone who comes by, I predict with confidence that you will quickly stop reading
because of the cost of continuing. Unfortunately, we commonly accept
arguments that would make sense only if people ignore the opportunity costs of
A persistent claim is that in market economies where the profit motive reigns
supreme, extremely valuable inventions are hidden to prevent their sale.
Supposedly, if the inventions were available they would destroy the profits of big
corporations by making their products obsolete. So these corporations buy up
wonderful inventions to make sure we can’t buy them.
That an amazing invention has never been found in some secret warehouse
does nothing to reduce people’s belief that such things exist; they’re hidden,
aren’t they? The reality is that the opportunity cost of hiding a valuable invention
is so great that inventions worth more than they cost are quickly made available.
Hidden inventions exist only in economically uninformed imaginations.
The Hidden Carburetor
A popular hidden-invention claim concerns a carburetor that would greatly
increase the gas mileage of ordinary automobiles. Assume that while tinkering in
your garage you develop a carburetor that allows the heaviest car to get 150
miles per gallon—your mileage may vary slightly, depending on how you drive.
Would you hide this invention? Surely not, because the opportunity cost would be