Teaching Econ: abstract professors vs. concrete students

Robert Frank has an article in the NY Times on why econ professors do such a lousy job of teaching. He concludes that we simply don't know the subject ourselves. As evidence he cites research showing that most new econ PhD's flunked a simple quiz, reproduced at the bottom of this post. He recommends giving simple puzzles to students to work out on their own, like "Why do soda vending machines dispense one can at a time, while newspaper vending machines allow you to take as many newspapers as you like?" [ANSWER BELOW].

I have an alternate hypothesis, that the problem is instead caused by the general mismatch between how professors and their students think and learn (article). The solution is to tie the theory much more closely to applications. This conveniently, and shamelessly, brings me to the point of suggesting an alternate solution:

A user's manual for applying economics to the real world!!, July 19, 2007

By	TerryJ (Atlanta, GA) - See all my reviews

When I picked up this book, I thought I was going to read yet another theoretical, ivory tower text on the finer points of micro economics. In stead, I read a relevant, well written, at times amusing text on how to apply economic principles to real business problems.

I particularly found interesting the real-world examples throughout the book. This is a must have for any MBA student, business leader, or someone trying to get ahead in the management world.

----ANSWER TO VENDING MACHINE QUESTION-----
The marginal utility of another newspaper is zero. The marginal utility of another soft drink is positive.

----CAN YOU RECOGNIZE AN OPPORTUNITY COST?--

QUIZ from Ferraro and Taylor:

Select the Best Answer to the Following Question:

You won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your next-best alternative activity. Tickets to see Dylan cost $40. On any given day, you would be willing to pay up to $50 to see Dylan. Assume there are no other costs of seeing either performer. Based on this information, what is the opportunity cost of seeing Eric Clapton?

A. $0
B. $10
C. $40
D. $50

Have an answer? Now try this one:

Select the Best Answer to the Following Question:You won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your next-best alternative activity. Tickets to see Dylan cost $40. On any given day, you would be willing to pay up to $50 to see Dylan. Assume there are no other costs of seeing either performer. Based on this information, what is the minimum amount (in dollars) you would have to value seeing Eric Clapton for you to choose his concert?

A. $0
B. $10
C. $40
D. $50

Have an answer? Scroll down.

The answer to both is (of course?) B.

A study polled PhD economists and found that only 22% got the first right, and about 40% got the second right. Year of degree, quality of school, etc., were insignificant in explaining this. Only significant finding was that micro theorists were better than all other groups, and macroeconomists were indistinguishable from undergraduates who NEVER took an econ course!