Opportunity Cost Neglect in Public Policy

In the the immediate future there is currently available a methodology for addressing income distribution in the rulemaking process by addressing “opportunity cost neglect”.  Opportunity cost neglect has been a subject well vented in Europe and it is beginning to make a headway in the United states.

Some fifty years ago, when a CRE employee was a career civil servant, not only was a strategy developed to address “opportunity cost neglect” but it was actually implemented for a short period until which time its use was abolished by an act of Congress, see page 16 of this post.

“We study opportunity cost neglect in public policy in experiments with members of the general public in Sweden and international experts on priority setting in health care.. We find strong evidence of opportunity cost neglect in public policy.. To our surprise, we failed to confirm an effect consistent with opportunity cost neglect in private consumption.. The implications of opportunity cost neglect for public policy are substantial, including misallocation of public resources and an artificially high demand for public spending.” Source

A Library

Out of Sight, out of Mind: How Opportunity Cost Neglect Undermines Democracy


Chatterjee, S., Rai, D., & Heath, T. (2011). Opportunity Costs Neglect in the Tradeoff Between Time and Money [Unpublished manuscript]. ACR North American Advances.

Frederick, S., Novemsky, N., Wang, J., Dhar, R., & Nowlis, S. (2009). Opportunity cost neglect. Journal of Consumer Research, 36(4), 553–561.


Fritzell, G., & Strand, L. (2018). The Opportunity Cost Neglect of Money and Time: The Role of Mental Budgeting [Unpublished manuscript].

Greenberg, A. E., & Spiller, S. A. (2016). Opportunity cost neglect attenuates the effect of choices on preferences. Psychological Science, 27(1), 103–113.

Moche, H., Erlandsson, A., Andersson, D., & Västfjäll, D. (2020). Opportunity Cost in Monetary Donation Decisions to Non-identified and Identified Victims. Frontiers in Psychology, 10, 3035. https://doi.org/10.3389/fpsyg.2019.03035

Persson, E., & Tinghög, G. (2020b). Opportunity cost neglect in public policy. Journal of Economic Behavior & Organization, 170, 301–312. https://doi.org/10.1016/j.jebo.2019.12.012

Plantinga, A., Krijnen, J. M. T., Zeelenberg, M., & Breugelmans, S. M. (2018). Evidence for Opportunity Cost Neglect in the Poor: Opportunity Cost Neglect in the Poor. Journal of Behavioral Decision Making, 31(1), 65–73. https://doi.org/10.1002/bdm.2041

Spiller, S. A. (2019). Opportunity cost neglect and consideration in the domain of time. Current Opinion in Psychology, 26, 98–102. https://doi.org/10.1016/j.copsyc.2018.10.001

Thaler, R. (1980). Toward a positive theory of consumer choice. Journal of Economic Behavior& Organization, 1(1), 39–60.

“This paper argues that in certain well-defined situations many consumers act in a manner that is inconsistent with economic theory. In these situations economic theory will make systematic errors in predicting behavior. . Topics discussed are: underweighting of opportunity costs…”

A Related Link:  CRE Publications on Income Distribution in Rulemaking

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