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September 28, 2011

There is no such thing as a free lunch in this world

There is no such thing as a free lunch in this world.

Ask any economist and within a matter of minutes he/she would say that there is no free lunch in this world. The "free lunch" referred to relates back to the once common tradition of saloons in the United States a "free lunch to patrons who had purchased at least one drink. 

There is no such thing as a free lunch on the other hand, indicates an acknowledgement that in reality a person or a society cannot get something for nothing. Even if something appears to be free, there is always a cost to the person or to society and as a a whole even though that cost may be hidden or distributed. For example bar offering a free lunch will likely charge more for its drinks.

This means that there is absolutely nothing that is totally free in this world. Let us see some examples:

May people would argue that watching Television is free. We do not pay anything for the programmes that we are watching. The payout is the cost of the television itself, the cable connection and the monthly rental for the cable, the time that we waste watching the programmes, the advertisements that we are forced to watch and so on.

In a class o economics one student said “sir one scientist has come out with a great idea. He is going to install rollers on the main roads of the city. When the vehicles roll on the rollers, energy will be generated this can be stored and used. Don’t you think that such energy is totally free?”

The professor replied “what about cost of installing the rollers, what about the friction that will be caused by the rollers on the wheels of the vehicles. What about the resultant wear and tear on the wheels of the vehicles and the subsequent replacement costs?” The student was speechless hearing the answer. 

There is no such thing as a free lunch demonstrates opportunity cost. To get one thing that one likes, one usually has to give up another thing liked. Making decisions requires trading off one goal against another. The idea that there is no free lunch at the societal level applies only when all resources are being used completely and appropriately if not, a 'free lunch' can be had through a more efficient utilization of resources. 

If one individual or group gets something at no cost somebody else ends up paying for it. If there appears to be no direct cost to any single individual, there is a social cost. Similarly someone can benefit for 'free' from an externality or from a public good, but someone has to pay the cost of producing these benefits. 

For example if one section of a society is getting a subsidy or low prices on a certain item, someone else is footing the bill for the subsidy. That somebody could be the government or a section of the population that pays extra taxes. 


  1. Correct sir, Nothing is free in this world that's the very first thing we should learn as business management students.I would like to present a different view that we should know what are the things which we are giving as 'free', cost associated with it and benefits expected in future.

  2. That was a very thought provoking comment, Imran!