Textbook models of externalities tacitly assume that those externalities fall upon individuals "outside" of the market. In many contexts--including common undergraduate examples--externalities fall "inside" the market instead. Positive externalities associated with vaccination, for instance, accrue to other individuals who…

An undergraduate course in development economics presents an ideal opportunity to introduce students to the importance of gender differences in economic outcomes. The authors of this article argue that a systematic integration of gender into development economics courses based on standard textbooks is feasible and desirable. They provide a…

Teaching students to use critical thinking skills is a popular goal of many economics courses. But what does "critical thinking" really mean, and how is it implemented? This article considers various interpretations of "critical thinking" and distinguishes "big-think" from "little-think" critical thinking,…

The topic of the Federal Reserve's (the Fed's) implementation of monetary policy has a significant presence in economics textbooks. Unfortunately, as the Fed purposefully shifted the way it implements monetary policy to an environment with ample reserves in the banking system, many textbooks have not kept up. The authors walk through the key…

The money creation and monetary policy chapters in the leading introductory textbooks commonly present an outdated and misleading approach that is now largely irrelevant. A preferable model would help students understand that money and monetary policy are about bank and household motives, the importance of capital, and the role of credit. An…

Rod O'Donnell writes here that there is a wide and deep confusion in contemporary economics about the concept and role of opportunity cost (OC). O'Donnell states that his main grounds for making this claim are the muddled, variable, and sometimes conflicting treatments of OC in modern textbooks; the disturbing empirical results in surveys of both…

Public choice uses the tools of economics to analyze how the political process allocates resources and impacts economic activity. In this study, the authors examine twenty-three principles texts regarding coverage of public choice, market failure, and government failure. Approximately half the texts provide coverage of public choice and recognize…

The authors evaluated principles of macroeconomics textbooks for readability using Coh-Metrix, a computational linguistics tool. Additionally, they conducted an experiment on Amazon's Mechanical Turk Web site in which participants ranked the readability of text samples. There was a wide range of scores on readability indexes both among…

Introductory textbooks teach a simple normative story about the importance of maximizing economic surplus that supports common policy claims. There is little defense of the claim that maximizing surplus is normatively important, which is not obvious to non-economists. Difficulties with the claim that society should maximize surplus are generally…

Several leading undergraduate intermediate macroeconomics textbooks now include a simple reduced-form New Keynesian model of short-run dynamics (alongside the IS-LM model). Unfortunately, there is no accompanying description of how the zero lower bound on nominal interest rates affects the model. In this article, the authors show how the…

A lack of consensus remains on what should form the theoretical core of the undergraduate intermediate macroeconomic course. In determining how to deal with the Keynesian/classical divide, instructors must decide whether to follow the modern approach of building macroeconomic relationships from micro foundations, or to use the traditional approach…

In most introductory textbooks on principles of economics, discussion of the theory or practice of entrepreneurship is almost entirely absent. This omission is striking, given the important role in economic growth that economists assign to the entrepreneur. While there are plausible explanations for this omission, new research suggests the…

Authors of intermediate microeconomics textbooks devote relatively more space to imperfectly competitive markets than can be justified by their relative occurrence in actual markets. This gap has persisted for at least 40 years, even with an almost complete turnover of authors between the decades of the 1960s and the 2000s. This portrayal gives…

Monotone methods enable comparative static analysis without the restrictive assumptions of the implicit-function theorem. Ease of use and flexibility in solving comparative static and game-theory problems have made monotone methods popular in the economics literature and in graduate courses, but they are still absent from undergraduate…

Responding to "Observations on the Use of Textbooks in the Teaching of Principles of Economics," Dolan agrees with Boskin's appraisal of textbooks. Explains why texts share common faults and proposes possible means of alleviating them. Examines five constraints on textbook writers, stating that by changing them, authors can change their…