Everything about Tanstaafl totally explained
TANSTAAFL is an acronym for the adage "
There Ain't No Such Thing As A Free Lunch," popularized by
science fiction writer Robert A. Heinlein in his 1966 novel
The Moon Is a Harsh Mistress, which discusses the problems caused by not considering the eventual outcome of an unbalanced economy. This phrase and book are popular with
libertarians and the phrase is often seen in
economics textbooks. In order to avoid a double negative, the acronym "
TINSTAAFL" is sometimes used instead, meaning "
There Is No Such Thing As A Free Lunch".
It demonstrates
opportunity cost.
Greg Mankiw described the concept as: "To get one thing that we like, we usually have to give up another thing that we like. Making decisions requires trading off one goal against another."
History and usage
The phrase refers to the once-common tradition of saloons in the United States providing a
"free" lunch to patrons, who were required to buy at least one drink.
Rudyard Kipling, writing in 1891, noted how he
came upon a barroom 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'd 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're stranded in these parts.
TANSTAAFL means that a person or a society can't get something for nothing. Even if something appears to be free, there's always a cost to the person or to society as a whole even though that cost may be hidden or distributed. For example, you may get complimentary food at a bar during "
happy hour," but the bar owner bears the expense of your meal and will attempt to recover that expense somehow. Some goods may be nearly free, such as fruit picked in the wilderness, but usually some cost such as labor or the loss of food for local wildlife is incurred.
The idea that there's no free lunch at the societal level applies only when all resources are being used completely and appropriately, for example, when
economic efficiency prevails. If not, a 'free lunch' can be had through a more efficient utilisation of resources. If one individual or group gets something at no cost, somebody else ends up paying for it. If there appears to be no direct cost to any single individual, there's a
social cost. Similarly, someone can benefit for "free" from an
externality or from a
public good, but someone has to pay the cost of producing these benefits.
To a scientist, TANSTAAFL means that the system is ultimately closed — there's no magic source of matter, energy, light, or indeed lunch, that won't be eventually exhausted. Therefore the TANSTAAFL argument may also be applied to natural physical processes. (See
Second law of thermodynamics.)
In
mathematical finance, the term is also used as an informal synonym for the principle of no-
arbitrage. This principle states that a combination of securities that has the same cash flows as another security must have the same net price.
TANSTAAFL is sometimes used as a response to claims of the virtues of
free software. Supporters of free software often counter that the use of the term "free" in this context is primarily a reference to a lack of constraint ("libre") rather than a lack of cost ("gratis").
Richard Stallman has described it as "free as in speech not as in beer".
TANSTAAFL was a favorite rejoinder of
Milton Friedman, the Nobel Prize–winning former University of Chicago professor.
The prefix "TANSTAA-" is used in numerous other contexts as well to denote some immutable property of the system being discussed. For example, "TANSTAANFS" is used by
Electrical Engineering professors to stand for "There Ain't No Such Thing As A Noise Free System".
Citations
- In 1950, a New York Times 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 [in1946]... a group of reporters approached the general with the request that perhaps he might give them one of several immutable economic truisms which he'd gathered from his long years of economic study... 'It is an immutable economic fact,' said the general, 'that there's no such thing as a free lunch.'"
- The book TANSTAAFL, the economic strategy for environmental crisis, by Edwin G. Dolan (Holt, Rinehart and Winston, 1971, ISBN 0-03-086315-5) may be the first published use of the term in the economics literature.
- Spider Robinson's 2001 book 'The Free Lunch' draws its name from the TANSTAAFL concept.
- The cafe at IIM Ahmedabad is named Cafe TANSTAAFL.
Further Information
Get more info on 'Tanstaafl'.
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