numbERs: Opportunity Cost as a Proxy for Empowerment:… : Emergency Medicine News – LWW Journals

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Belanger, Tom MD
I used a computerized survey of almost 500 emergency physicians in my past two articles ( to examine general opportunity costs—the cost to pursue one option over your next best alternative—and linked these to the pursuit of fellowship training. But what about the opportunity costs to assess employee power objectively and subsequent disempowerment, a crucial concept for emergency physicians at this juncture?
Employment can be thought of as a negotiation. Workers wish to sell their labor for the highest price, and employers wish to purchase that labor at a discount. If an employment agreement is made, a common price is found, and the negotiation is successful. But the negotiation is also dynamic: Changing circumstances may require a series of renegotiations even if an agreement was reached.
The two parties in most negotiations have different opportunity costs that make success more or less critical to each party. An employer unable to employ a specific essential worker may have quite high opportunity costs, but the opportunity costs for the employer might be low if the worker is easily replaceable. The employee sees the opposite side of the bargain, benefiting from increased personal demand and suffering from oversupply.
Terminating the negotiation (by quitting or being fired) is the most powerful weapon for either party, but it can only be used once. The comparative perceived threat of termination is what actually matters in deciding the advantage and terms of the negotiation. That’s why I measured the perception of power, focused on the employee side.
An employee’s opportunity cost in successfully negotiating with his employer can be thought of as the yield difference between the current option and the next best alternative, or BATNA (best alternative to a negotiated agreement). The better the BATNA, the higher the opportunity costs of a successful negotiation. The opportunity costs are, therefore, a good proxy for employee power.
Assuming the desire for employment, a physician’s BATNA is some other job, but locating this job takes time, which equates to lost income. The marginal utility of every dollar is also highly dependent on how many other dollars you have. Bill Gates has less use for a $20 bill than I do, so this means the lost time and income must incorporate an individual’s net worth to reflect opportunity costs in terms of real utility.
The most frequent reported net worth in the survey was $0. Many of these were likely real, but several were likely erroneous or misleading. I used the minimum reported net worth as zero for power calculations to differentiate between respondents with a net worth of $0. I used this formula to calculate opportunity costs: adjusted net worth/pay x time to find equivalent job = opportunity cost. The calculated opportunity cost ranged from 0 to 157,575.8 with a mean of 829.59 and a median of 49.85.
This measurement, highly extrapolated from self-reports and guessing, does seem related to individual perceptions of power. I was able to calculate a measure for employee power for 274 respondents, but the results were highly variable, and none of the differences in responses met the criteria for statistical significance.
Still, some clear trends did emerge in the data. Lower median opportunity costs (calculated) appear to be related to lower perceptions of one’s ability to effect change locally and within the specialty of emergency medicine as a whole. (See graphs.)
My hypothesis is straightforward using opportunity cost as a proxy for empowerment: Those most likely to be hurt by a set of circumstances are also the least likely to have the power to change those circumstances.
This means that a risk exists that those who stand to lose the most will also be the ones least likely to be able to speak for themselves. We have an obligation to identify and understand the most marginalized of us and act in their interest.
Time and effort must be devoted to this cause. Consolidation of power and resources is a self-perpetuating cycle that will lead to a worse outcome for us all.
Dr. Belangeris secretary of the American College of Emergency Physicians Locum Tenens section and an emergency physician in McKinney, TX. Read his past articles at
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