Originally Posted by
jkearns
Somebody explain to me why we should discard the well established definition and application of "opportunity cost?"
Economists have studied this type of question for a long time and have pretty much come to consensus on it. This is a pure, straightforward, simple application of it.
You are not understanding opportunity cost. Opportunity cost means what else can you do with these miles that you are redeeming for your trip.
You can't do anything with the miles because they can't be sold. You can sell your share of microsoft the opportunity cost of keeping it is the price it is selling at. You can sell an Ipod that you won or own so the cost of keeping it is whatever you could sell it for.
The opportunity cost of the miles for your trip to hawaii is that could you do with them otherwise. You could easily say tht the opportunity cost of two tickets to hawaii is 3 tickets to NYC because you can use the mile for ticket to NYC. But you can not say that the opportunity cost is $2100 because you can not convert 70K miles into $2100. Opportunity cost means you have the opportunity to take the alternative and here you do not have the opportunity to take $2100.
You are saying that 100K miles used to HKG for a $5000 business ticket has an opportunity cost of $5000. Explain to me how you can get $5000 for those miles. You can't. You can get a ticket to HKG, but you can't get cold hard cash. So the opportunity cost of those miles is a trip to HKG which is not necessarily worth $5000. This is way different than a share of stick which can be sold.