One of the most powerful yet counter-intuitive theories in economics is about comparative advantage. Comparative advantage is when an agent can produce something for a lower marginal cost than other agents. Contrast that with absolute advantage: who can produce the good most efficiently? In free trade, agents should do what they are comparatively best at and not always what they are absolutely best at.
Engineers have an absolute advantage over PMs when it comes to writing SQL queries, but do engineers also have a comparative advantage? If PMs wrote SQL queries, we would need to show that PMs have a lower marginal cost of writing SQL queries than engineers. The important assumptions:
- Time cost: How much faster can the engineer write a correct query?
- Opportunity cost: How different are the values of what PMs and engineers could be doing otherwise?
- Communication cost: Does the PM have to wait to get the query run?
In practice, we might consider fixed costs like how long it would take to give the PM access to the database and infrastructure, even though it may not contribute to marginal cost (our company may be a very finite timeline).
Let's compare costs in each bucket. Opportunity cost should be near equal for PMs and engineers if we're running a tight ship. For time cost, engineers can write queries faster and more correctly.
But should PMs write SQL queries? The communication costs must be greater than the extra time it takes the PM to write the query.
Let's take two cases: later-stage companies and startups. In later-stage companies, the time delta is likely to be larger: datasets are larger and queries more complex, and talent is more specialized. The inequality rarely holds. In startups, communication costs are low, so unless time is proportionally low, the inequality also doesn't hold. But this, of course, is a guideline, not always a hard and fast rule.
The takeaway is that it's important to think critically about a comparative advantage when deciding what to focus on. Using the dimensions of marginal cost (time, opportunity, and communication) can be an indicator of who should do what.