No Such Thing As A Free Lunch

There’s no such thing as a free lunch.

In English, this is a popular phrase that suggests you can’t get something for nothing.  (Readers, is there a similar saying in other languages?)  Like many common phrases, its origin is shrouded in mystery.

At the heart of the phrase, the concept of a “free lunch” refers to the late 1800’s practice of American saloons offering a no-cost lunch to customers who purchased a drink.  Even though the lunches were worth more than the price of the drink, the expectation was that most patrons would buy more than one drink and that they would become loyal customers.  In other words, the proprieters wanted the free lunch to have hidden costs.

One of the earliest mentions of this practice of giving free lunches is in the 1872 NY Times article called “The Loafer and Free Lunch Men”.  While the article suggests that the practice was not very successful, it doesn’t explicitly use the phrase.

In the Yale Alumni Magazine, Fred Shapiro traces the phrase’s origin to a June 27, 1938 El Paso Herald-Post called “Economics in Eight Words.”  A king asks his advisors to summarize economics in a simple way. Because being brief is hard,

they respond with 87 volumes of 600 pages each, drawing the king’s wrath and accompanying executions. Further demands and more executions force ever-briefer summations, until, finally, the last economist, “a man of profound wisdom,” speaks: “Sire, in eight words I will reveal to you all the wisdom that I have distilled through all these years from all the writings of all the economists who once practiced their science in your kingdom.

Here is my text: ‘There ain’t no such thing as free lunch.’

This may be the earliest use but Milton Friedman popularized the phrase by using it as the title of his classic 1975 economics book.

From an economics point of view, there’s no such thing as free lunch demonstrates the concept of opportunity cost.  While something might not have an explicit price, hidden or implicit costs must be considered to understand the full picture.  Because implicit costs are usually not obvious, especially to the casual observer, the concept of ‘free’ is an extremely powerful marketing tool.  “Buy one, get one free” requires you to buy one — often one of something you might not have otherwise purchased.

It’s time to get back to the seemingly free lunch provided by my employer.

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9 Responses to No Such Thing As A Free Lunch

  1. Timo Elliott June 26, 2011 at 9:47 pm #

    There’s not really a direct equivalent in French – closest I can think of is “On n’a rien sans rien” (maybe that’s why the lunches aren’t free at this location!)

    The notion of a free lunch is especially relevant these days, as we all read this page of content written for free, on a free website provided by WordPress, indexed for free by Google, accessed with a free browser.

    You can email for free, play games for free, install free operating systems, and operate free databases. Behind the scenes, however, there are several different trends:

    (1) “If you’re not paying; you’re the product”: in many cases your eyeballs are being sold to the highest bidder behind the scenes, for advertising or useful usage statistics

    (2) “Free like a puppy”: Commercial open source products with a service offer. The puppy is free, but be prepared to spend time and money cleaning up afterwards!

    (3) “Freemium”: The simple version of the product is free, but you pay to get extra features. This is a form of advertising, “get your free sample”!

    (4) “Trust me / Hire me / Like me!”: Content is provided for free to enhance one’s reputation as expert / artist, etc

    It is reasonable to be cynical about these types of “free”, but there’s one more:

    (5) Altruism: people have always been generous, and the Internet lets them do it in an unparalleled way, leading to what will surely be seen in the future as the dawn of a new renaissance, as ideas and advances as shared ever-wider and ever faster.

    Information, in particular, can cost almost nothing to share, but result in gains for everyone – not so much a free lunch as a free banquet!

    • Zbigniew Jerzak June 28, 2011 at 6:12 am #

      Sometimes what you get as “free” is also of no worth (a subliterate wasteland): http://opinionator.blogs.nytimes.com/2011/06/26/googles-war-on-nonsense/

    • Thomas Oestreich July 29, 2011 at 3:29 am #

      A truly interesting line of thought. In Germany we have a saying that goes like: Only your death comes for free.

      Regarding the notion of the supposedly ‘free’ Internet I have a slighty different perspective.

      IMO, while we do not pay money, we actually ‘exchange’ capital assets. E.g., Google gives us access to tangible assets, i.e. the server farms and software. We, in return, deliver intangible assets back to Google; these are brand value and value of information. What we deliver can not be found on the balance sheet, but is key in the market to book ratio (app. 4 to 1), and key for Google’s business model to generate revenue and profit.
      The brand value depends on our loyalty and mainly, IMO, from the network effect or demand side economies of scale. This creates the value of the platform called Google.
      And through our interaction, and the information we deliver to Google, advertisement revenues of app. $30 B with $8.5 B profit (FY2010) can be generated.

      If Google offers the same services as of today to us – assuming there would be some 300 million users willing to pay – it would cost each one less than $1 per month to have it all without advertisement. However, the market cap would most likely decrease significantly. This delta represents what we ‘pay’ for it to Google’s advantage.

  2. Robert E July 5, 2011 at 10:13 am #

    I’d recommend that you read the book “Cheap: The High Cost of Discount Culture”. It’s not just Free that can have a powerful affect on customers, also Cheap can be just as big. As the subtitle of the book suggests, Cheap comes with some big side effects.

  3. Kevin Cox July 11, 2011 at 11:21 am #

    There is a free lunch at the 7-11 on Mission and 30th Streets today from 11m to 2pm. It’s their grand openning. Free slurppies and hot dogs:-)

    • Scott Leatherman July 25, 2011 at 11:57 am #

      nope–you’ll be paying for those hot dogs a little later in the day ;-)

  4. Mike Mikovsky July 13, 2011 at 4:47 am #

    This is an especially timely post, which should remind us all that free, indeed, isn’t free. As Timo points out, “if you’re not paying, you are the product”..an interesting notion, especially considering that over 80% of the apps in Apples App Store are indeed, “Free”.

  5. itsmrob2769 October 17, 2011 at 3:23 am #

    Interestingly enough, in the business world we are having the same conversation about how we conduct meetings with all our vendors. We have started looking closely at the hidden costs (usually expectations or lack of discounting) of the “free lunch” provided by a vendor trying to sell us a product or service.
    One of the oldest “free lunches” in the industry is the concept of discounting or bundling “free” services in with the product.

  6. Armando Rodriguez March 12, 2014 at 11:33 am #

    Here is one in Spanish (LATAM) “Nada en la vida es gratis”

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