Contemporary Debates on Opportunity Cost Theory and Pedagogy

Forthcoming, The Economic Theory of Costs: Foundations and New Directions, edited by Matthew McCaffrey (Routledge, pp. 11-26); ISBN: 9781138670938

24 Pages Posted: 7 Nov 2017

Date Written: 2017

Abstract

Ferraro and Taylor’s (2005) finding that only 21.6% of economists could correctly answer a question on opportunity cost resulted in renewed debate over a fundamental concept. We review the lines of argument in a symposium on opportunity cost pedagogy and conclude that the confusion is due to the fact that opportunity costs are inappropriately presented alongside production tradeoffs in textbooks. We show that the traditional causal-realist ordinal and subjective conception of opportunity cost provides the desired clarity and consistency with real choice. Objections to the causal-realist opportunity cost concept in Reisman (1998) and Braun (2014) are also reviewed.

Keywords: opportunity cost, Austrian economics

Suggested Citation

Newman, Jonathan, Contemporary Debates on Opportunity Cost Theory and Pedagogy (2017). Forthcoming, The Economic Theory of Costs: Foundations and New Directions, edited by Matthew McCaffrey (Routledge, pp. 11-26); ISBN: 9781138670938. Available at SSRN: https://ssrn.com/abstract=3065724

Jonathan Newman (Contact Author)

Bryan College ( email )

721 Bryan Dr
Dayton, TN 37321

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