Although this story goes back to 2004, I am including it because it is one of the best illustrations of the importance of opportunity cost, as opposed to money cost, for making smart choices.

A universal flu-shot for all Canadians would cost about $125 million per year and improve health and save lives. Yet Canada’ chief medical officer opposes that plan, not because of the money cost, but because of “the opportunity cost: what we won’t be able to do if we spend the money on flu vaccine.” He argues there would be far greater benefits from spending the money on chronic disease prevention.

For any choice, you should compare the benefits with the money cost. But you should also compare the benefits to the alternative benefits of spending than same money cost on an entirely different choice. In other words, make sure you understand the benefits you are giving up by not choosing the alternative.