There Ain't No Such Thing As A Free Lunch - History and Usage - Meanings

Meanings

TANSTAAFL 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." The idea that there is no free lunch at the societal level applies only when all resources are being used completely and appropriately, i.e., 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 is 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.

In the sciences, TANSTAAFL means that the universe as a whole is ultimately a closed system—there is no magic source of matter, energy, light, or indeed lunch, that does not draw resources from something else, and will not eventually be exhausted. Therefore the TANSTAAFL argument may also be applied to natural physical processes in a closed system (either the universe as a whole, or any system that does not receive energy or matter from outside). (See Second law of thermodynamics.) The bio-ecologist Barry Commoner used this concept as the last of his famous "Four Laws of Ecology".

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 in equilibrium.

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".

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".

Several exceptions from the "no free lunch" tenet have been put forward, such as the Sun and carbon dioxide. It was argued in particular that metabolism evolved to take advantage of the free lunch provided by the Sun, which also triggers production of vital oxygen in plants.

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