It's not just famous people who have to think about choices.
In our everyday lives, knowing about economics helps us make decisions. This is also true for popular people. She still has to deal with scarcity and the potential cost of her time, even though she has a lot of money.
What does chance cost have to do with Taylor Swift's choice of which of her two private jets to fly to the Super Bowl?
Taylor Swift is in the middle of her worldwide Eras Tour. On February 7, 8, 9, and 10, 2024, she will play back-to-back shows in Tokyo, Japan. Travis Kelce is dating Taylor Swift. He is a tight end for the Kansas City Chiefs and played against the San Francisco 49ers in Super Bowl LVIII on Sunday, February 11, 2024, in Las Vegas.
Many Taylor Swift fans and other people are worried that she won't be able to get from her Eras Tour show in Tokyo to Las Vegas in time for the 2024 Super Bowl. She can make it to Las Vegas in time for the Super Bowl if she takes a private jet right after her last show in Tokyo. Remember that Japan (JST) is 17 hours ahead of Las Vegas (PST).
The question still stands: How is Taylor going to get from Tokyo to Las Vegas? What kind of private jet does she usually use? There has been a lot of talk on the internet about how the megastar will get to Las Vegas for the Super Bowl.
There was talk that Taylor might be flying her Dassault Falcon 900 jet from Tokyo to Las Vegas, but that idea is no longer valid. First, the Falcon 900 can't fly from Tokyo to Las Vegas without stopping. Tokyo is too far away for the Falcon 900 to reach the west side of the United States. This means that the jet would have had to stop in Hawaii for fuel before continuing on to Las Vegas, which would have been a very long way from Las Vegas. There are a lot of other things that Taylor could be doing with her time, and she won't want to waste time at a gas station in Hawaii on her way to Vegas to watch Travis play in the Super Bowl!
Reality backs up what this economist thought. Swift sold her Dassault Falcon 900 jet on January 30, 2024. She now only has one private jet, the Dassault Falcon 7X. This news came out after I had already written this piece about the opportunity cost.
If Taylor wants to get to the Super Bowl, what if she books a private jet? How does knowing about potential cost help her choose which private jet to book?
Looking to go into more detail with your students about the idea and estimates of opportunity cost? Why not connect it to something that many of your Gen Z students are likely interested in in real life, like Taylor Swift, Travis Kelce, the Eras Tour, or the Super Bowl? Do not say much! I've drawn out a possible real-life situation that Swift and her team may have seen this week.
Someone has been keeping an eye on Swift's two private jets and publishing the flight records. Her lawyers are not happy about this, as they say it puts Swift's safety at risk. It's also been talked about online as to whether Taylor would be able to find a place to park her jet since all the spots at the FBOs (Fixed-base Operators, which are like airports for private jets) in or near Las Vegas are taken because of the Super Bowl.
So, Taylor probably won't take her own jet to Vegas. Instead, she'll probably hire a private jet so that no one knows the N-number of the jet and she doesn't have to worry about where to park it. So, let's say she wants to try something new and change things up. Instead of chartering a Falcon 7X like the one she owns, she chooses between the Gulfstream 800 and the Bombardier 8000.
Each of these jets can fly about 8,000 nautical miles, which is about 9,206 miles. This means that they can all easily fly from Tokyo to Las Vegas without stopping, which is 5,530 miles away. The highest point that any of these planes can fly is 51,000 feet. The Gulfstream 800 and the Bombardier 8000 can fly higher than passenger planes, which usually stay between 38,000 and 40,000 feet. This means that Taylor will get a better tailwind as she goes from Tokyo to Las Vegas.
This plane can fly at Mach 0.85, which is about 652 mph. Mach 1 is the speed of sound, which is 767.269 miles per hour. If there is an average 80 mph breeze going from west to east, she'll be flying at about 732 mph. That means Taylor would need about 7.5 hours to fly the Gulfstream 800 from Tokyo to Las Vegas (5,530 miles x 732 mph = 7.55 hours).
The Bombardier 8000 can fly at about 721 mph, or Mach 0.94. With an average tailwind of 80 mph, she'll be going at about 801 mph. That means Taylor would need about 7 hours to fly the Bombardier 8000 from Tokyo to Las Vegas (5,530 miles x 801 mph = 6.90 hours).
Taylor will likely have to pay around $16,500 an hour to rent a Gulfstream 800 jet. A Bombardier 8000 jet would cost around $20,000 an hour. The Gulfstream 800 takes an hour longer to get to Las Vegas than the Bombardier 8000, but it costs about $3,500/hour more to rent.
Let's say that Taylor values her time as much as millions of dollars an hour when she's performing at a concert or recording in a studio. On the other hand, let's say she values her time as about $25,000 an hour when she's not performing at a concert or recording in a studio. Which plane should Taylor rent? The Bombardier 8000 or the Gulfstream 800?
Using the idea of "opportunity cost," Taylor should rent the Gulfstream 800 instead of taking the plane if she values her time flying at $25,000 an hour. Why?
Always keep in mind that the potential cost of a choice is the most important choice that person gave up in order to make their top choice. Opportunity costs are subjective, which means that they depend on how much each person values different other choices.
Furthermore, different people have different ideas about how much their time is worth. This means that some people will choose an option that costs more but gets them to their destination faster, like flying, while someone with a smaller budget and less value for time will choose an option that is cheaper but takes longer, like driving. When you think about opportunity cost, you should not only think about how much it will cost you in money, but also how much it will cost you in time if you choose that choice.
Taylor would have to pay about $140,000 to charter the Bombardier 8000 ($20,000 per hour x 7 hours = $140,000), but about $123,750 to charter the Gulfstream 800 ($16,500 per hour x 7.5 hours = $123,750). This means that the Bombardier 8000 will get her there 30 minutes faster, but it will cost her about $16,250 more than the Gulfstream 800.
If she's not performing or recording songs, her time is worth $25,000 an hour. That means that thirty minutes of her time is worth $12,000. This means that the Gulfstream 800 is the best choice for Swift because $12,500 is less than $16,250.
In this example, these time figures are just guesses. In real life, it's easy to make the case that this billionaire's time is worth more than these numbers. To give you an idea, if Swift thought her time when she's not performing or recording music was worth $40,000 an hour, then the Bombardier 8000 would be the better choice because $20,000 is more than $16,250.
