Starting Point: Teaching and Learning Economics > Teaching Methods > Context-Rich Problems > What are Context-Rich Problems?

What are Context-Rich Problems?

Context-rich problems are short, realistic scenarios giving the students a plausible motivation for solving the problem. The problems require students to utilize the underlying theory to make decisions about realistic situations.

A traditional problem focused on the concept of present value in economics would follow this type of format:

A discount bond matures in 5 years. The face value of the bond is $10,000. If interest rates are 2%, what is the present value of this bond?

A context-rich problem would instead follow this type of format:

You and your sister just inherited a discount bond. The bond has a face value of $10,000 and matures in 5 years. You would like to hold onto the bond until maturity, but your sister wants her money now. She offers to sell you her half of the bond, but only if you give her a fair price. What is a fair price to offer her? How can you convince your sister it is a fair price? See more about how to write context-rich problems

While the traditional problem tells the student what concept to use, the context-rich problem allows the student to connect the discipline to reality by requiring the student to decide present value is the appropriate concept to apply. The context-rich problem also requires the students to make the assumptions underlying the solution process explicit. Rather than being told to use 2% as an interest rate in the calculation, the student must come up with a reasonable interest rate and be able to defend that choice.

Components of context-rich problems

figures assembling puzzle
Every context-rich problem has the following properties:

  • The problem is a short story in which the major character is the student. That is, each problem statement uses the personal pronoun "you."
  • The situation in the problems are realistic (or can be imagined) but may require the students to make modeling assumptions.
  • The problem statement includes a plausible motivation or reason for "you" to do something.
  • Not all pictures or diagrams are given with the problems (often none are given). Students must visualize the situation by using their own experiences and knowledge.
  • The problem may leave out common-knowledge information
  • The problem's target variable may not explicitly be stated

There are several examples of context-rich problems available on the examples page.