A Simple Experiment of Comparative Advantage

Jim Stodder

International Economics

Non-computerized experiment

Paul Samuelson once said that David Ricardo's demonstration of Comparative Advantage is one piece of Economics which is perfectly simple without being perfectly obvious. This is shown, he claims, by the many business and political leaders of obvious intelligence who have utterly failed to understand it. Unfortunately, this can also be said of the many intelligent Economics students, who, having learned to parrot the theory, still do not believe it. Am I the only instructor who, having put his Ricardian triangles through their paces, has turned from the blackboard to notice expressions that are somewhat more than skeptical? As an MBA student said to me good-naturedly after class, "Well, it's all theory, isn't it?" The best diet for such healthy skepticism is for students to take a ride atop those trade triangles themselves--before hearing what theory says should happen. By taking this ride, the teacher himself was led to discover a simple misinterpretation reproduced in many textbooks. The pedagogical experiment is as follows.