The Ignorance Economy

Imagine finding a place to stay in a city, say Bangalore. You know what you are looking for, you have your specifications. A place that allows bachelors (Good luck with that!), within your budget, with basic amenities like wifi, may be a parking spot for your dysfunctional bike. You know such places exist, you just don't know where, and how to find it. A few years ago, you would have found a house broker and have extensive negotiations. He will show you a couple of shoddy houses to bring down your expectations and drive up his utility. Finally you will most likely settle for a place within your parameters and pay the brokerage.
Lets deep-dive into what happened here. The brokers job was just connecting you to an opportunity that already existed. You are paying for your ignorance. This was a simple, if inefficient example. You might think, that don't all payments fall under ignorance costs then? Imagine you take an Uber or Ola, then you pay for convenience, not ignorance. It perhaps is a matter of not payment itself, but the cause behind payment. Are you being forced to pay, rather than choosing to pay? Then it probably is ignorance cost.

It is a vastly complex topic, though i tried to explain it away with two lousy examples. Let me put some more effort into it. But then it will get complicated, and you need to bear with me. Only if you want to stop paying ignorance costs. Oh wait, i forgot a blatantly simple example. Do you remember paying service charges in restaurants? Service charge, not service tax. Most people didn't know that you are under no obligation to  pay service charge, which is akin to tips you leave at restaurants, if you liked the service. Brilliant example of ignorance costs.

Now let us get to the more nuanced grey areas. You might be a student or working. And if in India, by probability, an engineer. Are you working in the domain you studied. Or more importantly, given how expensive education is. Was it work your job, is there a proportionality? For a menial repetitive, you need not be an engineer. Was it a wrong investment. A cost you paid due to ignorance of how the industry works?

Let us get to something more domestic. Assume you are building a house of your own. Do you really know the ratio of concrete mix? Do you know the labour charges? Do you know the cost of men and material and times to wait and times to hurry? If you give out a contract you are basically betting on trust. And I'm all about encouraging trust. Keeps people gullible enough to read my blog.  But I just hope unless you Know, you are paying the ignorance cost.
Is it humanly possible to know about everything, be prepared for everything and never pay the ignorance costs? Perhaps not, it is not even necessary. But you should endeavour to have some rudimentary knowledge. At least enough to give the contractor a patronising look, which says "I know the cost is not the cost that should be. But I'm feeling generous today."

In your daily life, keep a tab of ignorance cost.
It is unavoidable. And it will help you understand why Knowledge is power Money.