The Economic History of 'No Free Lunch'

The adage "no such thing as a free lunch" communicates the idea that it is impossible to get something for nothing, a concept that lies at the core of economics [1]. Historically, the phrase referred to the formerly common practice in American bars of offering a "free lunch" to entice drinking customers, with foods high in salt making patrons thirsty and leading them to buy more beer [1]. While the phrase suggests a hidden cost, economists use it to describe opportunity cost, illustrating that resources are finite and getting one thing usually requires giving up another [1].

Key takeaways

• The phrase "no such thing as a free lunch" signifies that obtaining something for nothing is impossible and is used to describe opportunity cost in economics [1].
• The "free lunch" tradition originated in 19th-century American saloons where salty food was served to increase drink sales [1].
• Some sources trace the commercial practice to New Orleans in the 1830s, specifically to a businessman named Alvarez at the St. Louis Hotel [2].
• The phrase was popularized in the 20th century by Robert A. Heinlein’s 1966 novel and Milton Friedman’s 1975 book [1].

From Saloons to Economic Theory

The earliest known use of the phrase in its current economic sense was in a 1938 article by Walter Morrow titled "Economics in Eight Words," which served as a fable about a king seeking economic advice [1]. However, the practice of providing free meals has deeper roots, with some researchers tracing the tradition to English monastics in the late Middle Ages who provided hospitality to strangers [2]. In the United States, advertisements for free lunches appeared in New York City and Ohio newspapers in the 1850s, while New Orleans is often credited as the birthplace of the institution [2]. A New Orleans newspaper noted that the free lunch allowed merchants to transact business over food, eventually spreading from the city to other Southern towns [2].

Popularization and Broader Meaning

The acronym TANSTAAFL gained mainstream exposure through Robert A. Heinlein’s 1966 science-fiction novel The Moon is a Harsh Mistress, which featured the concept as a central theme [1]. Economist Milton Friedman further popularized the idea by using it as the title of a 1975 book, cementing its place in economic literature [1]. In economics, the concept illustrates opportunity cost, meaning that to get one desirable thing, another must be given up, and if one person gets something for free, someone else usually pays for it [1].

Why it matters

The concept serves as a fundamental reminder of tradeoffs in decision-making, highlighting that resources are finite and apparent benefits often carry hidden social or individual costs [1]. It is applied across various fields, including finance as a principle of no-arbitrage and in science regarding the conservation of energy in closed systems [1].