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get what does the economic phrase there is no such thing as a free lunch mean? from EN Bilgi.
There ain't no such thing as a free lunch
There ain't no such thing as a free lunch
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"No free lunch" redirects here. For the medical advocacy group, see No Free Lunch (organization). For the theorem in mathematical optimization, see No free lunch theorem.
"There ain't no such thing as a free lunch" (alternatively, "There is no such thing as a free lunch" or other variants) is a popular adage communicating the idea that it is impossible to get something for nothing. The acronyms TANSTAAFL, TINSTAAFL, and TNSTAAFL are also used. The phrase was in use by the 1930s, but its first appearance is unknown. The "free lunch" in the saying refers to the formerly common practice in American bars of offering a "free lunch" in order to entice drinking customers.
The phrase and the acronym are central to Robert Heinlein's 1966 science-fiction novel , which helped popularize it. The free-market economist Milton Friedman also increased its exposure and use by paraphrasing it as the title of a 1975 book, and it is used in economics literature to describe opportunity cost. Campbell McConnell writes that the idea is "at the core of economics".
1 History and usage 1.1 "Free lunch" 1.2 Early uses 1.3 Popularization 1.4 Meanings 1.4.1 Economics 1.4.2 Finance 1.4.3 Statistics 1.4.4 Technology 1.4.5 Sports 1.4.6 Exceptions 2 See also 3 Notes 4 References
History and usage
The "free lunch" refers to the once-common tradition of saloons in the United States providing a "free" lunch to patrons who had purchased at least one drink. Many foods on offer were high in salt (e.g., ham, cheese, and salted crackers), so those who ate them ended up buying a lot of beer. Rudyard Kipling, writing in 1891, noted how he
...came upon a bar-room full of bad Salon pictures, in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts.
TANSTAAFL, on the other hand, indicates an acknowledgement that in reality a person or a society cannot get "something for nothing". Even if something appears to be free, there is always a cost to the person or to society as a whole, although that may be a hidden cost or an externality. For example, as Heinlein has one of his characters point out, a bar offering a free lunch will likely charge more for its drinks.
TANSTAAFL: a plan for a new economic world order. (Pierre Dos Utt, 1949)
The earliest known occurrence of the full phrase (except for the "a"), in the form "There ain't no such thing as free lunch", appears as the punchline of a joke related in an article in the of June 27, 1938 (and other Scripps-Howard newspapers about the same time), entitled "Economics in Eight Words".
In 1945, "There ain't no such thing as a free lunch" appeared in the , and "there is no free lunch" appeared in a 1942 article in the (in a quote attributed to economist Harley L. Lutz) and in a 1947 column by economist Merryle S. Rukeyser.
In 1949, the phrase appeared in an article by Walter Morrow in the (published on 1 June) and in Pierre Dos Utt's monograph , which describes an oligarchic political system based on his conclusions from "no free lunch" principles.
The 1938 and 1949 sources use the phrase in relating a fable about a king (Nebuchadnezzar in Dos Utt's retelling) seeking advice from his economic advisors. Morrow's retelling, which claims to derive from an earlier editorial reported to be non-existent, but closely follows the story as related in the earlier article in the , differs from Dos Utt's in that the ruler asks for ever-simplified advice following their original "eighty-seven volumes of six hundred pages" as opposed to a simple failure to agree on "any major remedy". The last surviving economist advises that "There ain't no such thing as free lunch."
In 1950, a columnist ascribed the phrase to economist (and army general) Leonard P. Ayres of the Cleveland Trust Company: "It seems that shortly before the General's death [in 1946]... a group of reporters approached the general with the request that perhaps he might give them one of several immutable economic truisms that he had gathered from his long years of economic study... 'It is an immutable economic fact,' said the general, 'that there is no such thing as a free lunch.'"
The September 8, 1961, issue of has an editorial on page 4, "'TANSTAFL,' It's the Truth," that closes with an anecdotal farmer explaining this slight variant of TANSTAAFL.
In 1966, author Robert A. Heinlein published his novel , in which TANSTAAFL was a central, libertarian theme, mentioned by name and explained. This increased its use in the mainstream.
Edwin G. Dolan used the phrase as the title of his 1971 book .
There Ain't No Such Thing as a Free Lunch (TANSTAAFL) Definition
"There ain't no such thing as a free lunch" is an expression that speaks to the idea that everything ultimately has a cost and nothing is truly free.
There Ain't No Such Thing as a Free Lunch (TANSTAAFL)
By ALEXANDRA TWIN Updated August 24, 2020
What Is There Ain't No Such Thing as a Free Lunch (TANSTAAFL)?
"There ain't no such thing as a free lunch" (TANSTAAFL), also known as "there is no such thing as a free lunch" (TINSTAAFL), is an expression that describes the cost of decision-making and consumption. The expression conveys the idea that things appearing free always have some cost paid by somebody, or that nothing in life is truly free.
A free lunch refers to a situation where there is no cost incurred by the individual receiving the goods or services being provided, but economists point out that even if something were truly free there is an opportunity cost in what is not taken.
"There ain't no such thing as a free lunch" (TANSTAAFL) is a phrase that describes the cost of decision-making and consumption.
TANSTAAFL suggests that things that appear to be free will always have some hidden or implicit cost to someone, even if it is not the individual receiving the benefit.
In investing, buying Treasury bills is an example of someone thinking they are getting a good deal for very little. But the tradeoff in buying Treasuries is the opportunity cost of not being invested in higher-risk, higher-reward securities over time.
How TANSTAAFL Works
The TANSTAAFL concept is important to consider when making various types of decisions, whether they be financial or lifestyle. The concept can help consumers make wiser decisions by considering all indirect and direct costs and externalities.
In economics, TANSTAAFL describes the concept of opportunity costs, which states that for every choice made, there is an alternative not chosen which would also have produced some utility. Decision-making requires trade-offs and assumes that there are no real free offerings in society. For example, products and services gifted (free) to individuals are paid for by the person giving the gift. Even when there is no one to assume the direct costs, society bears the burden, as in the case of negative externalities like pollution.
Investors must remain particularly wary of a seemingly free lunch when dealing with investments that promise a stream of fairly high, fixed payments over a period of multiple years with supposedly low risk. Many of these investments remain laden with hidden fees, some of which may not be fully understood by investors. In general, any investment that promises a guaranteed return is not a free lunch because there is some implicit cost somewhere, including the opportunity cost of not investing elsewhere.
There is also the implicit cost related to unseen risks. Some brokerages heavily marketed mortgage-backed securities (MBS) as an apparent free lunch in the early 2000s. These investments were described as being very safe, AAA-rated investments, backed by a diversified pool of mortgages. However, the housing crisis in the U.S. exposed the true underlying risk of these investments, as well as a faulty ratings system that classified pools of loans as AAA, even when many of the underlying loans carried very substantial default risks.
Even products and services given to individuals for free are not truly free; a company, government, or individual ultimately pays the cost.
History of the TANSTAAFL Concept
The concept of TANSTAAFL is thought to have originated in 19th-century American saloons where customers were given free lunches with the purchase of drinks. From the basic structure of the offer, it is evident that there is an implicit cost associated with the free lunch: the purchase of a drink.
However, there are additional unseen costs resulting from the consumption of the free lunch. Because the lunches were high in salt, customers were enticed to purchase more drinks. So the saloons purposely offered free lunches with the expectation that they would generate enough revenue in additional drinks to offset the cost of the lunch. The proposal of a free good or service with the purchase of another good or service is an oxymoronic tactic many businesses still use to entice customers.
TANSTAAFL has been referenced many times historically in a variety of different contexts. For example, in 1933, former New York City mayor Fiorello H. La Guardia used the Italian phrase “È finita la cuccagna!" (translating to "no more free lunch”) in his campaign against crime and corruption. Popular references to the phrase can also be found in Robert Heinlein's "The Moon Is a Harsh Mistress" as well as in Milton Friedman’s book “There Ain't No Such Thing as a Free Lunch.”
Examples of TANSTAAFL
Across different disciplines (e.g., economics, finance, statistics, etc.), TANSTAAFL has different connotations. For example, in science, it refers to the theory that the universe is a closed system. The idea is that a source of something (e.g., matter) comes from a resource that will be exhausted. The cost of the supply of matter is the exhaustion of its source.
In sports, TANSTAAFL was used to describe the health costs associated with being great at a sport, like "no pain, no gain." Despite the different meanings, the common factor is cost.
For investments, TANSTAAFL helps to explain risk. Treasury bills (T-bill), notes, and bonds offer a nearly risk-free return; however, the opportunity cost of investing in one of these instruments is the foregone opportunity to invest in an alternative, riskier investment. As an investor moves higher on the risk spectrum, the phrase TANSTAAFL becomes even more relevant as investors provide capital with hopes of achieving larger gains than what less-riskier securities yield; however, this choice assumes the cost that growth prospects may not be achieved and the investment could be lost.
The saying 'There's no such thing as a free lunch'
The meaning and origin of the phrase 'There's no such thing as a free lunch'.
There's no such thing as a free lunch
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What's the meaning of the word 'There's no such thing as a free lunch'?
The economic theory, and also the lay opinion, that whatever goods and services are provided, they must be paid for by someone - that is, you don't get something for nothing. The phrase is also known by the acronym of 'there ain't no such thing as a free lunch' - tanstaafl.
What's the origin of the word 'There's no such thing as a free lunch'?
Before discussing the origin of 'there's no such thing as a free lunch' it would be useful to go back to the days in which lunches were free. Free lunch was a commonplace term in the USA and, to a lesser extent in Britain, from the mid 19th century onward. It wasn't used to describe handouts of food to the poor and hungry though, it denoted the free food that American saloon keepers used to attract drinkers; for example, this advertisement for a Milwaukee saloon, in The Commercial Advertiser, June 1850:
At The Crescent...
Can be found the choicest of Segars, Wines and Liquors...
N. B. - A free lunch every day at 11 o'clock will be served up.
Free lunches, often cold food but sometimes quite elaborate affairs, were provided for anyone who bought drink. This inducement wasn't popular with the temperance lobby and was also criticized for the same reason that others in the 20th century later introduced the TANSTAAFL idea to economic thinking, that is, saloon customers always ended up paying for the food in the price of the drinks they were obliged to consume. Indeed, some saloon keepers were prosecuted for false advertising of free lunch as customers couldn't partake of it without first paying money to the saloon.
It was into this context that the economic theorists enter the fray and 'there's no such thing as a free lunch' is coined. It isn't known who coined the phrase. It certainly wasn't the economist Milton Friedman, who was much associated with the term. He was a celebrated Nobel Prize-winning economist and his monetarist theories were highly influential on the Reagan and Thatcher administrations in the 1980s and 90s. Friedman certainly believed that 'there's no such thing as a free lunch' and he published a book with that title in 1975, but wasn't, and never claimed to be, the originator of the phrase.
The phrase appears to have come about in response to the libertarian views of Henry Wallace, the US Vice President between 1941 and 1945. He wrote an article which was originally published by The Atlantic Monthly in which he suggested a post-WWII worldwide economic regime offering "minimum standards of food, clothing and shelter" for people throughout the world and offering the opinion that "If we can afford tremendous sums of money to win the war, we can afford to invest whatever amount it takes to win the peace". Paul Mallon, a Washington journalist, responded to Wallace's article with a critical piece, published in several US papers, including The Lima News, January 1942:
"Mr. Wallace neglects the fact that such a thing as a 'free' lunch never existed. Until man acquires the power of creation, someone will always have to pay for a free lunch.
The first record I can find of the precise phrase there's no such thing as a free lunch, comes following year, in an editorial in The Long Beach Independent, October 1943, again referring to Wallace:
"Some people say there is no such thing as a free lunch, but you listen to a fireside chat from Washington, and the voice will tell you all about it, and how you can make something for nothing."
The 'there ain't no such thing as a free lunch' version of the phrase is often reduced to the acronym TANSTAAFL. This is widely associated with the science fiction writer Robert Heinlein. he did used the term several times in his 1966 novel The Moon is a Harsh Mistress, but the coinage of the acronym pre-dates that by at least a quarter of a century. The earliest citation I can find for tanstaafl is from October 1949, when it appeared in a book review published in several US newspapers, including The Independent Record:
Now, our secret: Tanstaafl is mnemonic for "there ain't no such thing as a free lunch."
See other phrases that were coined in the USA.