… a core concept used in Policy Analysis and Process and Atlas101

Concept description

Paul Johnson (reference below) defines trade-off as the results of having to accept having less of one thing in order to get more of something else.

Johnson writes:

“When choices are made (collectively or by an individual) to accept having less of one thing in order to get more of something else, the results are called trade-offs. For example, when one is allocating (limited) funds, the trade-off usually involves reduced spending for some purposes in order to be able to spend more for other more urgent purposes.

“However, the concept does not apply only (or even primarily) to decisions involving money. A student faced with the choice of spending Saturday studying for a Political Economy exam or shopping at The Mall makes a trade-off of shopping time for study time in deciding how many hours to study and how many to spend shopping. Society also makes trade-offs – such as, for example, between its need for a more plentiful supply of energy and its need to prevent excessive deterioration of the environment caused by energy production technologies.

“Evaluating trade-offs, when done carefully and systematically, involves comparing the costs and benefits of each of the available alternatives with each other. Most choices (and thus most trade-offs) are not all-or-nothing decisions; rather they typically involve small changes at the margin – a little more of this at the cost of a little less of that. Consumers continuously practice marginalism and make trade-offs as they consider whether to buy one more unit or one unit less of a good or service in their efforts to obtain a mix of goods and services that afford them the greatest satisfaction for their available buying power.

“Producers must constantly be deciding (and reevaluating) their trade-offs in choosing whether to produce somewhat more or somewhat less of a particular product, whether to add a few more workers or lay a few off, whether to invest in more plant and equipment or whether to close down some of existing capacity, and so on – in their efforts to maximize profits.”

See also Opportunity Cost; Marginal and Marginalism.

Atlas topic, subject, and course

The Study of Policy Analysis and Process (core topic) in Policy Analysis and Process and Atlas101 Policy Analysis and Process.


Paul M. Johnson (2005), Trade-off, A Glossary of Political Economy Terms, at, accessed 31 October 2017.

Page created by: Ian Clark, last modified 31 October 2017.

Image: Reach For Infinity, What Makes Us Indecisive? at, accessed 31 October 2017.