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What Is A Police Officer Worth? Insights of Opportunity Cost

What Is A Police Officer Worth? Insights of Opportunity Cost published on

Zig Ziglar is purported to have said, “Show me your checkbook and your calendar and I will tell you what is most important in your life.”  There is truth in that statement. Economists refer to it as “revealed preferences”; when faced with actual choices and opportunity costs, how you choose reveals what you value most.

Yesterday I had opportunity to visit with a local high school AP Econ class to discuss whatever they wanted about economics and various issues. At some point we got on the topic of the recently rejected “use tax” proposal floated by our city and county governments that I wrote about earlier. A primary argument for the use tax was that our city needs to hire more police officers, and online sales are diverting local sales tax dollars from the city coffers.

This raised the question of what priorities does the City government actually have? After all, the City has two ways of paying for more police officers: raising more revenue (in the form of more taxes) or reallocating its existing revenues from competing uses. If the City truly believed having more police was such an important use of tax dollars, the City could do what many households do: reallocate their budget to their higher priority items, then go back and buy those other things when there’s more income available.

I decided to take a peek at our City’s budget for FY2018. In particular, how much does the City spend to staff an “Office of Cultural Affairs” that basically uses tax dollars to pay city employees to subsidize and promote public art and local artists. Don’t get me wrong–art and cultural attractions are an important element of the quality of life in our community. But rarely do we fret about choosing between a good option and an undesirable option. The nature of economics is having to choose between two goods, and what that choice says about how we evaluate them.

Traffic control box art.

Based on our City’s checkbook (budget), publicly supported art and culture is worth more than having six additional sworn police officers. That’s how many additional sworn police officers could be hired if the City redirected the Cultural Affairs budget to policing. That’s not a judgment of the trade-off–it’s simply the economic facts based on the opportunity cost of the City’s revealed preferences in its resource allocation decision. We could go down the line with any number of other City ‘services’ to draw similar comparisons of opportunity costs.

Would the average citizen agree that public funding for art is worth more than six additional police officers? I don’t know. I’m doubtful. But the citizens have never been asked that question. Instead, the City just continues to seek an increase in taxes to pay for more police so it can have its art and its police, too.

Of course, there’s a political economy angle to this that might be perceived as more cynical (or sinister?). Which is the average citizen more likely to be willing to be taxed for at the margin? More art? Or more police? That strikes me as pretty much a no-brainer. Which likely explains why the City refuses to reallocate the arts funding (or any other expenditures) to pay for the police now and ask taxpayers for more money to resume doing those other (lower-valued) things.

Entry way globe decorations.

Either one of two alternatives would appear to be true: our city government values public art more than it does having another six police officers; or, City officials manipulate the decision options for taxpayers by allocating funding to lower-valued services (making the City less safe?) in order to request tax increases for the foregone higher-valued services that taxpayers are more likely to approve. The latter would seem a form of extortion, so I’m sure it must be the former.

This situation is by no means unique or limited to our fair city. It’s true in yours, too; and at the State and Federal levels as well. Every government entity has decisions in how to allocate its receipts. How those allocations are made speaks to what is truly important to those making the decisions, and to their ability to manipulate voters’ interests at the margin.

Death, Taxes, and Opportunity Costs

Death, Taxes, and Opportunity Costs published on

They say two things are unavoidable in life: death and taxes. I’d like to propose adding opportunity costs to that list.

In his State of the Union address in January, President Obama announced his support for a “moonshot” researchsotu initiative to cure cancer. “For the loved ones we’ve all lost, for the family we can still save, let’s make America the country that cures cancer once and for all,” the President announced to a hearty round of applause. And deservedly so. I suspect there are few, if any, people whose lives have not been touched by cancer, either suffering it directly or with loved ones.

Since then, I’ve had several friends on Facebook post their support of the President’s proposal and their personal desire to eradicate cancer. Some even arguing we should spend “whatever it takes” to rid ourselves of this horrible disease. But while I empathize with their heart-felt conviction, I can’t help but ask, “at what cost?” And I don’t mean (just) the dollars and cents. Okay, the billions of dollars. I mean the opportunity cost of focusing so many resources on the goal of “curing” cancer.

As an economist, one (should) necessarily asks the question: what is the marginal benefit versus the marginal cost of eliminating cancer. Sounds cold and heartless? Bear with me a minute.

According to the US Dept of Health & Human Services,Continue reading Death, Taxes, and Opportunity Costs

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