Is “Free”, Really “Free” ?

Farouk Kadous
Jul 5, 2016 · 3 min read

Walking down my university campus I occasionally see a long line of happy individuals waiting sometimes for free burgers, free pizza, or free cookies, seeing them, what do I usually do? Like a sane individual I stand in line to take my fair share. If you have been on college campuses around the country you understand the power of “free food”. Free food isn’t just free food, it’s actually a social club’s soft power, one may argue. It’s a way to lure students to join the student clubs even if was for only a moment or two, also known as a bite or two. It can also be a way of marketing a student club’s work and initiatives, which usually happens during those long lines. I’ve been really interested in understanding the cost of those long lines. I know for a fact that those lines cost their organizers a lot. Sometimes those pizza boxes or those burgers cost 4 digits. However, how much does it cost for the freeliners? Many of them pay nothing, but is “nothing” really “nothing”? Can we say that there is a “Cost for Zero Cost?”

This question is not only related to those who stand in line for their free pizzas, free burgers, or free cookies, but in many ways it transcends to those have access to the internet. I could have been writing those words on a laptop, which runs on a free operating system like Linux, but it wouldn’t matter to some because they only use one program like the free Firefox Web Browser. I also don’t have to use Microsoft words, rather I could use Google Docs, which gives me the ability to access it at anytime and anywhere to make any amendments. I can also send it with facebook messeger for free to my friends or colleagues using a “free” social media website like Facebook or Twitter. However, Facebook, the free social media website posted $3.67 billion in profit in 2015. Facebook might be giving their social media platform for free, but they are making a killing off the information they gather along the way ?!

As human beings we are allured by free stuff. The behavioral economist Dan Ariely talks about the power of free stuff in his book, Predictably Irrational; The Hidden Forces That Shape Our Decisions. Arielly conducted an experiment in which he offered Lindt Trffles at 15 cents and a Hershey Kiss at one cent a piece and since the quality of the Lindt Truffles is higher, 73 percent of the participants chose the Lindt while only 27 percent chose a Kiss. However, once he decided to offer the Hershey Kiss for free and the Lindt Truffle for 14 cents, things changed. The numbers swapped. The number of participants who chose the Hershey Kiss were 69 percent while 31 percent chose the Lindt. The participants gave up a really high quality chocolate at a really good price for an average chocolate like the Hershey Kiss just because it was free. Yes, a difference of once cent made such a drastic difference. This is the opportunity cost. The availability of free products always comes at a price we tend to misperceive and think is “Zero” while in reality the Zero costs more than “Zero”. Thus, this “Free” comes with at least one if not many opportunity costs.

Farouk Kadous

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Studied Finance, Sociology, and International Affairs @Northeastern University. Investor in Disruptive Equities.