 and welcome to the Big Ideas Live Recap of our episode Why Doesn't the TSA Keep Us Safe? I've just finished recording the latest conversation with Steve Horwitz, who's a Charles A. Dana Professor of Economics at St. Lawrence University, and we've had a great conversation that I hope you'll check out. I wanted to give you a little bit of a teaser about a few of the things that we talked about tonight. So, Steve, we talked about opportunity cost and why it's important for people who are not only thinking about decisions in their own lives, but also thinking about public policy or the news or anything else, why it's a useful concept. What exactly is opportunity cost and why do people miss it? Well, opportunity cost is at the core of the economic way of thinking, and for economists what opportunity cost refers to is the most basic definition is the next best option that we had. And so when we think in terms of economics as being about scarcity, scarcity means we can't have everything. If we can't have everything, we have to make choices. When we make a choice, we're giving up something for whatever we gain. So as I like to teach my students, when I teach early in the morning, if you came to class today, what'd you give up? You gave up an hour's sleep. So opportunity cost at its base is the next best choice people had. When we think about that more carefully, what we really begin to see is that a more precise definition is opportunity cost is the expected subjective utility of the next best alternative. And so those three words are important. Utility in economics refers just to the usefulness of a good, the notion that a good can achieve a want can meet an end for us. So for example, you know, a Starbucks latte has utility because it can quench our thirst or give us caffeine or whatever the goal is that we want to achieve. So utility is just that that capacity to achieve an end. The subjective and you expected part of the interesting part, utility is subjective. That is only the chooser knows just whether a good can achieve an end and just how important that end is. So you got to have the latte, maybe you do, maybe you don't, maybe you don't like lattes, you just like black coffee. So whether lattes, how much utility lattes have, how important they are is ultimately subjective. So we make that determination. The expected part means when we face a choice, we never actually experience the thing we give up. We never experience our opportunity cost. If we choose to go to class rather than sleep, we never know how good of an hour's sleep we would have had. If we sleep, we never know how good class would be. At that moment of choice, when we're standing at the fork in the road, we're thinking the expected utility of this, the expected utility of this, which one do I think is greater? I choose. But I never know the road not taken. I never know what I didn't choose. And that's opportunity cost. It matters to us at the moment of choice because that's the thing we perceive we're giving up to do the thing we perceive we want. It might turn out we make a bad choice, but at the moment of choice, we picked one rather than the other because one had greater subjective expected utility. Yeah. And of course, we don't really necessarily think it through like that, which I think is a big part of why people miss it. So I don't want to spoil our conversation completely for anybody who wants to go watch it. So I'm going to let anybody who wants to know why we think the TSA doesn't keep us safe. You can go watch the full event. So why don't we talk about the opportunity cost of the TSA instead? What are some of the things that we give up to have the TSA? What could we have had instead? Well, I think there's lots of ways of thinking about that at a sort of basic resource level to the degree that if the TSA isn't improving airline security, all the resources that we're spending on doing it have alternative uses. The people who work for TSA could be out working at Starbucks. They could be out producing cars or whatever it might be. There's all other kinds of uses that are the kinds of goods and services they could be producing. The physical resources, the energy that went into researching how to make the scanners and all that kind of stuff has opportunity costs that if we didn't have the TSA, those resources could be doing other things and things that we ultimately value more that are more productive. So at one level, the question of what would we have instead would be where would those resources go. But the other what instead question is what would airline and airport security look like if we didn't have the TSA, right? And so what are we giving up? Well, one thing we're giving up is that perhaps we'd see the airlines and the airports working together to provide security and that would generate some interesting competition. If airlines have incentives to provide for some provide safe flights and they certainly do, then they have an incentive to find new and interesting ways and effective ways, cost effective ways to provide security. With just the TSA sort of an essence handling monopoly over it, we don't see any of that innovation or discovery or creativity that we'd see if airlines were competing and airlines might offer different types of security. Some might advertise as being super secure and charge you more, others advertise as being we're cheaper but we don't screen as carefully. So we would find out, we would discover what it is that people want and just what amount of security are they willing to pay for. With the TSA, we don't know the answer to that question because we finance it through tax dollars and fees and we just don't have a real sense of what the various points in that tradeoff and that spectrum are. Yeah, for sure. And I may be wrong, but I don't think the TSA pays terribly shabby. Yeah, no, they pay okay to attract people from other jobs, that's for sure. So there are people who are being drawn out of other jobs. That's right. Where you would definitely be helping someone. Yep, yep. And judging by without spoiling too much. I think we've all seen the news stories about somebody who gets a knife or a gun or a bottle of water. Right. Yeah, or don't forgets to take their shoe off. Right. I mean, yeah, so yeah, how, you know, even if we put the cost question aside for a moment, how effective are they as the other half of the equation? Because when we think in terms of is this worth it? Economic efficiency is the question, is it worth it? What's the marginal benefit? What's the marginal cost? If the benefits aren't great, then all of a sudden it looks a lot worse. Yeah. Thanks so much, Steve. I hope that this has been enough to get you guys interested. Our video will be posted at fee.org slash big ideas and you can also check out archive materials from past events as well. Thanks for joining us again tonight and thanks again, Steve, for appearing tonight. My pleasure, Janet.