Do Economists Recognize an Opportunity Cost When They See One? A Dismal Performance from the Dismal Science

Paul J Ferraro 1 , 1  and Laura O Taylor 2 , 2
  • 1 Georgia State University, pferraro@gsu.edu
  • 2 Georgia State University, laura_taylor@ncsu.edu

One expects people with graduate training in economics to have a deeper understanding of economic processes and reasoning than people without such training. However, as others have noted over the past 25 years, modern graduate education may emphasize mathematics and technique to the detriment of economic reasoning. One of the most important contributions economics has to offer as a discipline is the understanding of opportunity cost and how to apply this concept to all forms of decision making. We examine how PhD economists answer an introductory economics textbook question that requires identifying the relevant opportunity cost of an action. The results are not consistent with our expectation that graduate training leads to a deeper understanding of the concept. We explore the implications of our results for the relevance of economists in policy, research, and teaching.

Purchase article
Get instant unlimited access to the article.
$42.00
Log in
Already have access? Please log in.


Journal + Issues

The B.E. Journal of Economic Analysis & Policy (BEJEAP) is an international forum for scholarship that employs microeconomics to analyze issues in business, consumer behavior and public policy. Topics include the interaction of firms, the functioning of markets, the effects of domestic and international policy and the design of organizations and institutions.

Search