A Story of Comparative Advantage

Of all the ideas in economics, comparative advantage may be the one that is most likely to bring forth the old line that "economics explains things that are good in theory, but don't work in practice." I won't bother to point out that if something doesn't work in practice, the theory usually doesn't last long.

But if you are looking for an interesting story to explain comparative advantage to your students, please look at this post at the Library of Economics and Liberty. It's written by Dr. Russell Roberts, a professor at George Mason University and titled Treasure Island: The Hidden Elegance of Comparative Advantage. It does a nice job putting the idea into a simple, easy to understand story.

Let me know how this works. I think it beats heck out of the wool/wine story that many of us use to explain the concept.

Posted by TSchilling at 4:15 PM Comments (0)