What is the opportunity cost of attending class?
Summary
Students calculate the opportunity cost for an activity that is very relevant to their lives—attending class. Explicit costs of attending school for one semester are identified and then reduced to a per class amount. Identification of the implicit cost entails listing several alternatives and estimating a per class amount for the alternative with the highest value. The opportunity cost of attending one class is the sum of the explicit and implicit costs. Not only do students benefit from a practical application of an important economic concept, they also become more aware of the importance of attending class!
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Context for Use
Description and Teaching Materials
PDF version of this page for faculty use in the classroom -- this would include all notes. (LINK TO PDF) Mark, I'm not sure what goes in here?
In a recent class that met MWF for one hour during a sixteen-week semester, the calculated opportunity cost of attending one class ranged from $40 - $80. Lower costs were seen for students who live at home, close to campus, and for those who estimated fairly low wages. The median opportunity cost of attending one class was $56.
Student handout with instructions for calculating the opportunity cost of attending one class.
Opportunity Cost Handout (Microsoft Word 2007 (.docx) 14kB Jun5 10)
Teaching Notes and Tips
This activity follows the steps of an Interactive Lecture Demonstration (LINK to HOW TO PAGE)
1. Prediction
The instructor starts with a general discussion on the costs of going to school. Students are asked to predict how much it costs them to attend one class. Students can discuss prediction with other students in the class. The instructor asks for the predictions but does not comment on them.
2. Experience
Students, working individually or in small groups, follow instructions in the handout to estimate the explicit, implicit and total opportunity costs of attending one class.
In order to save time, the instructor might give students the per credit hour tuition and fees total and/or the number of times the class the class meets during the semester. Otherwise, students usually have a good idea of how much their total bill was and most will have calendars on their cell phones.
3. Reflection
Students report their costs to the rest of the class. The instructor leads students in a discussion of how much higher the calculated costs are compared to the predicted costs. The instructor can point out that the relatively high opportunity cost of attending one class also implies a high cost of deciding not to attend class. Since each student will have a different opportunity cost, the class could also discuss why this variation occurs, including differences in experience and training.
Assessment
Students may submit their completed cost calculations for instructor review. The activity could also be graded. The instructor can also ascertain student understanding through their contributions to the reflective class discussion.
Instructors who use pre-tests and post-tests could include these or similar questions:
- How are opportunity costs measured in economics?
- Suppose you need to see the dentist and the appointment will take two hours. The dentist will charge $100 and you make $10 an hour at work. What is the explicit cost of this appointment? What is the implict cost? What is the total opportunity cost?
- What is the difference between the way an accountant measures costs and the way an economist measures costs?