A TALE OF TWO INVASIONS
N JUNE 6, 1944, ALLIED SOLDIERS STORMED THE
beaches of Normandy, beginning the liberation
of France from German rule. Long before the
assault, however, Allied generals had to make a crucial
would the soldiers land?
They had to make what we call an “either–or”decision.
the invasion force could cross the English Channel
at its narrowest point, Calais—which was what the
it could try to surprisethe Germans
by landing farther west, in Normandy. Since men and
landing craft were in limited supply, the Alliescouldnot do
both. In fact, they chose to
Normandy were too weak
to stop the landings, and
the Allies went on to liber-
ate France and win the war.
Thirty years earlier, at
the beginning of World
War I, German generals
had to make a different
kind of decision. They, too,
planned to invade France,
in this case by land, and had decided to mount that inva-
sion through Belgium. The decision they had to make was
not an “either–or” but a “how much” decision:
of their army should be allocatedto the invasionforce, and
how much should be used to defend Germany’s border
with France? The original plan, devised by General Alfred
von Schlieffen, allocated most of the German army to the
invasion force; on his deathbed, Schlieffen is supposed to
have pleaded, “Keep the right wing [the invasion force]
strong!” But his successor, General Helmuth von Moltke,
weakened the plan: he reallocated to the defense some of
the divisions that were supposed to race through Belgium.
The weakened invasion force wasn’t strong enough: the
defending French army stopped it 30 miles from Paris.
Most military historians believe that by allocating too few
men to the attack, von Moltke cost Germany the war.
So Allied generals made the right decision in 1944;
German generals made the wrong decision in 1914. The
important point for this chapter is that in both cases the
generals had to apply the same logic that applies to
economic decisions, like
consumption decisions by
households and production
decisions by businesses.
In this chapter we will
involved in making eco-
understand how any indi-
makes an economic deci-
sion. We begin by taking a deeper look at the significance
of opportunity cost for economic decisions and the role it
plays in “either–or” decisions. Next we turn to the problem
of making “how much” decisions and the usefulness of
We then examine what kind of costs
should be ignored in making a decision—costs that econo-
We end by considering the concept of
and its importance for making decisions when
costs and benefits arrive at different times.