McGahon 1, 78% of economists 0

Alex Tabarrok is surprised to discover that 156 out of 200 economists answered this question incorrectly:

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, or (d) $50.

I'm even more surprised that I answered correctly.

.

(b)

If you are willing to pay up to $50 to see Bob, then the value of attending that concert to you is this minus the cost of the ticket: $50 - $40 = $10. The opportunity cost is the $10 value you would forgo to see Clapton.

Comments

[Abiola Lapite]

I found it extremely astonishing myself that anyone with a PhD could possibly get wrong something so obvious. There is something amiss with the credentialing process at a lot of institutions for something so ridiculous to be possible.

[Frank McGahon]

One of the comments at Marginal Revolution by "Tom" suggests a possible explanation - sloppy reading:

I said $50 too; in fairness to the profession, most of them probably did what I did, which was to think that you could go to the Dylan concert for free too. Yes, I know it says "Tickets to see Dylan cost $40," but on a careless reading that could mean "...for all those suckers who don't get to see it for free."

[Frank McGahon]

Actually, reading the comments further, there does seem to be considerably more confusion about the definition of opportunity cost than I had imagined

[Frank McGahon]

But Radek is probably right:"

In fact, even though reading the study makes it seem like everything's kosher on the surface the whole thing is just setting my alarm bells off and the bullshit detector is flashing red. There's no way that 78% of economists would get this wrong. There's gotta be something left out - I'd tend to go with the guy above who actually was part of the original survey seconds before a stressful job interview and said that the only thing he remembered was that taking the survey was the last thing he wanted to do. I also somewhat cynically suspect those who administered the survey - not the authors of the article but some hired students. Perhaps, meeting with a lot annoyed refusals some of them decided to fill in some questionnaires themselves and thought that if they filled it in 'at random' that would look legit. I shouldn't cast unfounded doubts, but like I said, there's something fishy going on. Any rate, if I was to referee this paper I'd tell the authors to replicate the survey in a few other contexts, with different people, different conditions and then come back...

[Brian]

It's odd... my initial answer was $10 but I assumed it was wrong because it seemed too straight forward for 78% of economists surveyed to get wrong.

(And I only took one econ course, Economics 101, in university)

[Frank McGahon]

Well it's either

a) A genuine mistake through sloppy reading of the question.

b) A botched survey as Radek suggests.

c) These economists were too clever by half in redefining opportunity cost - Tyler Cowen's followup post would tend to suggest that