A trade-off (or tradeoff) is a situation that involves losing one quality or aspect of something in return for gaining another quality or aspect. More colloquially, if one thing increases, some other thing must decrease. Tradeoffs can occur for many reasons, including simple physics (into a given amount of space, you can fit many small objects or fewer large objects). The idea of a tradeoff often implies a decision to be made with full comprehension of both the upside and downside of a particular choice, such as when a person decides whether to invest in stocks (more risky but with a greater potential return) versus bonds (generally safer, but lower potential returns).
The term is also used widely in an evolutionary context, in which case natural selection and sexual selection act as the ultimate "decision-makers". In biology, the concepts of tradeoffs and constraints are often closely related. In economics, a trade-off is commonly expressed in terms of the opportunity cost of one potential choice, which is the loss of the best available alternative.
Examples from common life
The concept of a trade-off is often used to describe situations in everyday life. The old saying "do not put all of your eggs into one basket" implies a trade-off with respect to spreading risk, as when one buys a mutual fund composed of many stocks rather than only one or a few stocks that may have a higher expected value of return. Similarly, trash cans can be small or large. A large trash can does not need to be put out for pickup so often, but it may become so heavy when full that one risks injury when trying to move it.
In cold climates, mittens serve well to keep the hands warm, but they do not allow the hands to function as well as do gloves. In a like fashion, warm coats are often bulky and hence difficult to store or even to hang up.
When copying music from compact disks to a computer, lossy compression formats, such as MP3, are used routinely to save harddisk space, but information is thrown away to the detriment of sound quality. Lossless compression schemes, such as FLAC or ALAC save less space but do not affect the sound quality.
In the Olympics, the best sprinters are not the same individuals as the best marathoners, a trade-off based on various morphological, physiological (e.g., variation in muscle fiber type), and possibly motivational factors.
Tradeoffs in economics
In economics a trade-off is expressed in terms of the opportunity cost of a particular choice, which is the loss of the most preferred alternative given up. A tradeoff, then, involves a sacrifice that must be made to obtain a certain product, service or experience, rather than others that could be made or obtained using the same required resources. For example, for a person going to a basketball game, their opportunity cost is the loss of the alternative of watching a particular television program at home.
Many factors affect the tradeoff environment within a particular country, including availability of raw materials, a skilled labor force, machinery for producing a product, technology and capital, market rate to produce that product on reasonable time scale, and so forth.
A trade-off in economics is often illustrated graphically by a Pareto frontier, which shows the greatest (or least) amount of one thing that can be attained for each of various given amounts of the other. As an example, in production theory the trade-off between output of one good and output of another is illustrated graphically by the production possibilities frontier. The Pareto frontier is also used in multi-objective optimization. In finance, the Capital Asset Pricing Model includes an efficient frontier that shows the highest level of expected return that any portfolio could have given any particular level of risk, as measured by the variance of portfolio return.
Tradeoffs in other specific fields
Tradeoffs are important in engineering. For example, in electrical engineering, negative feedback is used in amplifiers to trade gain for other desirable properties, such as improved bandwidth, stability of the gain and/or bias point, noise immunity, and reduction of nonlinear distortion. The Golden Gate Bridge is a prime rare example where few engineering and aesthetic tradeoffs had to be made.
In demography, tradeoff examples may include maturity, fecundity, parental care, parity, senescence, and mate choice. For example, the higher the fecundity (# of offspring), the lower the parental care. Parental care as a function of fecundity would show a negative sloped linear graph. A related phenomenon, known as demographic compensation, arises when the different components of species life cycles (survival, growth, fecundity, etc) show negative correlations across the distribution ranges. For example, survival may be higher towards the northern edge of the distribution, while fecundity or growth increases towards the south, leading to a compensation that allows the species to persist along an environmental gradient. Contrasting trends in life cycle components may arise through tradeoffs in resource allocation, but also through independent but opposite responses to environmental conditions.
- By compressing an image, you can reduce transmission time/costs at the expense of CPU time to perform the compression and decompression. Depending on the compression method, this may also involve the tradeoff of a loss in image quality.
- By using a lookup table, you may be able to reduce CPU time at the expense of space to hold the table, e.g. to determine the parity of a byte you can either look at each bit individually (using shifts and masks), or use a 256-entry table giving the parity for each possible bit-pattern, or combine the upper and lower nibbles and use a 16-entry table.
- For some situations (e.g. string manipulation), a compiler may be able to use inline code for greater speed, or call run-time routines for reduced memory; the user of the compiler should be able to indicate whether speed or space is more important.
The Software Engineering Institute have a specific method for analysing tradeoffs, called the Architectural Tradeoff Analysis Method or ATAM.
Ethics often involves competing interests that must be traded off against each other, such as the interests of different people, or different principles (e.g. is it ethical to use information resulting from Nazi human experiments to prevent disease today?)
In medicine, patients and physicians are often faced with difficult decisions involving tradeoff. One example is localized prostate cancer where patients need to weigh the possibility of a prolonged life expectancy against possible stressful treatment side-effects (patient trade-off).
Governmental tradeoffs are among the most controversial political and social difficulties of any time. All of politics can be viewed as a series of tradeoffs based upon which core values are most core to the most people or politicians. Political campaigns also involve tradeoffs, as when attack ads may energize the political base but alienate undecided voters.
With work schedules, employees will often use a tradeoff of "9/80" where an 80-hour work period is compressed from a traditional 10 working days to 9 to facilitate an "off-friday".
Analytical methods to support a trade study
Trade studies are essentially decision-making exercises. In the FAA Systems Handbook. the decision analysis matrix (aka Pugh's method) is suggested to support the activities, but this method cannot support uncertainty, a mix of quantitative and qualitative information, or teams. To manage uncertainty, the authors suggest supplementing point estimates of the outcome variables for each alternative with computed or estimated uncertainty ranges. The Standard Approach to Trade Studies, an INCOSE paper from 2004, suggests a similar approach.
In the NASA Systems Engineering Handbook NASA suggests using multi-attribute utility theoretic (MAUT) or the Analytic Hierarchy Process (AHP). But, these too are not good with uncertainty, mixed information and teams. The authors suggest using probability based methods to maximize utility when uncertainty predominates, but give little detail on how to approach this.
In many situations, linear programming methods like the simplex algorithm can be used but these too do not support uncertainty. Another approach to supporting trade studies with uncertain information is to use the Bayesian methods.
- Architecture tradeoff analysis method
- Biological constraints
- Carrier's constraint
- Detection error tradeoff
- Evolutionary medicine
- Evolutionary physiology
- Pareto front
- Patient trade-off
- Space–time tradeoff
- Trade-off theory of capital structure
- Williamson trade-off model
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