Quarterly Journal of Austrian Economics

“Finance Behind the Veil of Money”: A Rejoinder


Quarterly Journal of Austrian Economics 19, no. 2 (Summer 2016)

In Finance Behind the Veil of Money, Eduard Braun (2014, pp. 30–36) takes the minority view that opportunity costs are not only unnecessary but even unhelpful to understanding choice.1 In doing so he follows George Reisman (1996, p. 460) who also views the “doctrine of opportunity cost” as not only unnecessary to ascertain how one makes better decisions, but that its “sole contribution is obfuscation, not perception.” Both Braun and Reisman believe that it is unnecessary to include foregone alternatives in the calculus of cost since it implies that “one must suffer by virtue of possessing the very qualities that create one’s success [i.e., better opportunities]” (Reisman, 1996, p. 460).

Such a view errs by overlooking the difference between the actor’s ex-ante expectations of an action with the ex-post results. More importantly, it mistakes what role costs in general, and opportunity costs by extension, serve in economic theory.


  • 1Although Braun claims that “the main arguments in [his] book do not depend on [his] approach to the cost problem”, there is no doubt that his variant of cost theory derives a distinct theory of interest which is of utmost importance in valuing financial assets, one of the main themes of his book.
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