Comparative Advantage
Focus on what you do relatively better, even if others are absolutely better at everything.
What It Is
Comparative advantage is the ability to produce a good or service at a lower opportunity cost than others. Even if someone is better than you at everything (absolute advantage), you should still focus on what you're relatively best at, and they should do the same. This creates mutual benefit through specialization and trade.
Why It Matters
This principle explains why specialization and trade benefit everyone, even when skill levels differ dramatically. It applies to international trade, business organization, and personal productivity. Understanding comparative advantage helps you focus on your strengths and collaborate effectively rather than trying to do everything yourself.
How to Apply It
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Identify what you do relatively better compared to your other skills
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Calculate opportunity costs: what do you give up by doing each task?
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Focus on tasks where your opportunity cost is lowest
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Trade or delegate tasks where others have comparative advantage
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Remember: it's about relative, not absolute, advantage
Example
A CEO might be the best salesperson, marketer, and accountant in their company. But if their comparative advantage is in strategy and fundraising, they should focus on that and hire others for sales, marketing, and accounting—even if those people aren't as good as the CEO would be at those tasks.