s4h-economics-margin

Name: s4h-economics-margin
Author: human-avatar

205stars23forks

How to install s4h-economics-margin?

human-avatar/skills-for-humanity/s4h-economics-margin

$npx -y skills add human-avatar/skills-for-humanity --skill s4h-economics-margin

Installs into the current project.

Summary

Applies marginal thinking: the relevant decision is the next unit, not the average or the sunk cost. Triggers: 'should we do more of this', 'should we expand', 'should we cut', 'marginal cost', 'sunk cost', 'we've already invested so much', 'average cost', 'is this worth continui

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SKILL.md

1	# Economics: Marginal Thinking
2
3	The most important word in economics is marginal. Not average. Not total. Not what we have spent. The relevant question is always: what happens at the next unit? Should we hire one more engineer? Produce one more batch? Add one more feature? Run one more campaign? The answer depends on the marginal cost (what that next unit costs) compared to the marginal benefit (what that next unit produces). When marginal benefit exceeds marginal cost, do more. When it doesn't, stop.
4
5	This sounds obvious. In practice, organisations almost universally fail to apply it. They use average cost when they should use marginal cost. They treat past expenditure as a reason to continue when it is economically irrelevant. They ask "should we have done this?" instead of "should we do more?" Alfred Marshall embedded marginal analysis at the heart of neoclassical economics precisely because pre-marginal thinking — evaluating the total or average rather than the increment — systematically produces wrong decisions.
6
7	The sunk cost fallacy is the most costly failure of marginal thinking. Resources already spent cannot be recovered — they are irreversible. They therefore cannot and should not influence forward decisions. Yet Kahneman's research confirms that people weight sunk costs heavily: the pain of a loss already incurred motivates continued investment in failing projects far more than forward-looking analysis would justify. This skill's core move is to strip sunk costs from the analysis and restate the decision in purely forward-looking marginal terms.
8
9	---
10
11	## Your Process
12
13	Step 1: Identify the margin
14	Clarify what the decision is actually about. Is it: (a) whether to do one more unit of something, (b) how many units to produce/do/hire, (c) whether to continue an existing project or commitment, (d) how to allocate resources across competing uses? The answer determines what "marginal" means in this context.
15
16	Framing check: Confirm the decision and the relevant margin before continuing. State what you've identified in one sentence, then use `AskUserQuestion`:
17	- Question: "I'm reading this as: [one-sentence framing — the decision and what unit is being considered at the margin]. Is that right?"
18	- Header: "Framing"
19	- Options:
20	- Yes — proceed — framing is correct
21	- Adjust — one element is off; user will correct it before you continue
22	- Reframe — different situation than read; incorporate the correction before proceeding
23
24	Step 2: Identify and isolate sunk costs
25	Before any forward analysis, identify all costs already committed that cannot be recovered: capital already spent, time already invested, contracts already signed, decisions already made. Label these explicitly as sunk costs. They are real — they happened — but they are economically irrelevant to the forward decision. State this clearly: "These costs have been incurred. They cannot be recovered. They will not appear in the forward analysis."
26
27	If the user is anchored on sunk costs (using past investment as a reason to continue), name this directly: this is the sunk cost fallacy. The question is not whether the past investment was good. The question is whether the next unit of investment produces a return.
28
29	Step 3: Calculate marginal cost
30	What does the next unit cost? Marginal cost includes all costs that change with the next unit — variable costs, additional labour, materials, time — but excludes fixed costs that are unchanged by the decision (these are already being borne regardless). Note: marginal cost often differs from average cost. For many activities, marginal cost is initially lower than average cost (economies of scale) but eventually rises as capacity constraints are reached.
31
32	Step 4: Estimate marginal benefit
33	What does the next unit produce? This might be: revenue, impact, risk reduction, optionality, information value. Be specific about the unit and the increment. Where marginal benefit is uncertain, use expected value (probability-weighted). Where marginal benefit is qualitative, use an explicit scale.
34
35	Step 5: Make the marginal comparison
36	Compare marginal benefit to marginal cost at the relevant unit. The rule:
37	- If marginal benefit > marginal cost → do more
38	- If marginal benefit < marginal cost → do less (or stop)
39	- If marginal benefit = marginal cost → you are at the optimum
40
41	Repeat this comparison across units if the decision involves quantity: where does the curve cross? At what level of output does marg

human-avatarPublisher · 61 listings

Preview

human-avatar/skills-for-humanity

# Economics: Marginal Thinking

The most important word in economics is *marginal*. Not average. Not total. Not what we have spent. The relevant question is always: what happens at the *next u

This sounds obvious. In practice, organisations almost universally fail to apply it. They use average cost when they should use marginal cost. They treat past e

The sunk cost fallacy is the most costly failure of marginal thinking. Resources already spent cannot be recovered — they are irreversible. They therefore canno

Repohuman-avatar/skills-for-humanity

LicenseMIT

TypeSkills

CategoryGeneral

UpdatedJul 2026

Repo stars205

First seenJul 22, 2026

People who liked this also viewed

6 picks

Type

s4h-economics-margin

205stars23forks

View on GitHub

How to install s4h-economics-margin?

human-avatar/skills-for-humanity/s4h-economics-margin

$npx -y skills add human-avatar/skills-for-humanity --skill s4h-economics-margin

Installs into the current project.

Summary

Files · 1

View on GitHub

SKILL.md

1	# Economics: Marginal Thinking
2
3	The most important word in economics is marginal. Not average. Not total. Not what we have spent. The relevant question is always: what happens at the next unit? Should we hire one more engineer? Produce one more batch? Add one more feature? Run one more campaign? The answer depends on the marginal cost (what that next unit costs) compared to the marginal benefit (what that next unit produces). When marginal benefit exceeds marginal cost, do more. When it doesn't, stop.
4
5	This sounds obvious. In practice, organisations almost universally fail to apply it. They use average cost when they should use marginal cost. They treat past expenditure as a reason to continue when it is economically irrelevant. They ask "should we have done this?" instead of "should we do more?" Alfred Marshall embedded marginal analysis at the heart of neoclassical economics precisely because pre-marginal thinking — evaluating the total or average rather than the increment — systematically produces wrong decisions.
6
7	The sunk cost fallacy is the most costly failure of marginal thinking. Resources already spent cannot be recovered — they are irreversible. They therefore cannot and should not influence forward decisions. Yet Kahneman's research confirms that people weight sunk costs heavily: the pain of a loss already incurred motivates continued investment in failing projects far more than forward-looking analysis would justify. This skill's core move is to strip sunk costs from the analysis and restate the decision in purely forward-looking marginal terms.
8
9	---
10
11	## Your Process
12
13	Step 1: Identify the margin
14	Clarify what the decision is actually about. Is it: (a) whether to do one more unit of something, (b) how many units to produce/do/hire, (c) whether to continue an existing project or commitment, (d) how to allocate resources across competing uses? The answer determines what "marginal" means in this context.
15
16	Framing check: Confirm the decision and the relevant margin before continuing. State what you've identified in one sentence, then use `AskUserQuestion`:
17	- Question: "I'm reading this as: [one-sentence framing — the decision and what unit is being considered at the margin]. Is that right?"
18	- Header: "Framing"
19	- Options:
20	- Yes — proceed — framing is correct
21	- Adjust — one element is off; user will correct it before you continue
22	- Reframe — different situation than read; incorporate the correction before proceeding
23
24	Step 2: Identify and isolate sunk costs
25	Before any forward analysis, identify all costs already committed that cannot be recovered: capital already spent, time already invested, contracts already signed, decisions already made. Label these explicitly as sunk costs. They are real — they happened — but they are economically irrelevant to the forward decision. State this clearly: "These costs have been incurred. They cannot be recovered. They will not appear in the forward analysis."
26
27	If the user is anchored on sunk costs (using past investment as a reason to continue), name this directly: this is the sunk cost fallacy. The question is not whether the past investment was good. The question is whether the next unit of investment produces a return.
28
29	Step 3: Calculate marginal cost
30	What does the next unit cost? Marginal cost includes all costs that change with the next unit — variable costs, additional labour, materials, time — but excludes fixed costs that are unchanged by the decision (these are already being borne regardless). Note: marginal cost often differs from average cost. For many activities, marginal cost is initially lower than average cost (economies of scale) but eventually rises as capacity constraints are reached.
31
32	Step 4: Estimate marginal benefit
33	What does the next unit produce? This might be: revenue, impact, risk reduction, optionality, information value. Be specific about the unit and the increment. Where marginal benefit is uncertain, use expected value (probability-weighted). Where marginal benefit is qualitative, use an explicit scale.
34
35	Step 5: Make the marginal comparison
36	Compare marginal benefit to marginal cost at the relevant unit. The rule:
37	- If marginal benefit > marginal cost → do more
38	- If marginal benefit < marginal cost → do less (or stop)
39	- If marginal benefit = marginal cost → you are at the optimum
40
41	Repeat this comparison across units if the decision involves quantity: where does the curve cross? At what level of output does marg

human-avatarPublisher · 61 listings

Preview

human-avatar/skills-for-humanity

# Economics: Marginal Thinking

The most important word in economics is *marginal*. Not average. Not total. Not what we have spent. The relevant question is always: what happens at the *next u

This sounds obvious. In practice, organisations almost universally fail to apply it. They use average cost when they should use marginal cost. They treat past e

The sunk cost fallacy is the most costly failure of marginal thinking. Resources already spent cannot be recovered — they are irreversible. They therefore canno

Repohuman-avatar/skills-for-humanity

LicenseMIT

TypeSkills

CategoryGeneral

UpdatedJul 2026

Repo stars205

First seenJul 22, 2026

People who liked this also viewed

6 picks

Type