The diamond water paradox is one of the first concepts learned in an introductory Econ class; hopefully not until a “history” class.
I was an Econ professor in the past and this was quite literally the first thing I spoke about in introductory courses. This is the analogy used to describe what the science of economics is, the study of the allocation of scarce resources.
I was an Economics major and also took AP Economics in high school and there may have been other analogies used but I don't remember hearing the D/W paradox till that history of econ class.
That class was wonderful b/c it taught me a lot of the "first principles" of economics using real stories and examples instead of "here is a supply/demand chart, accept that it's true".
Which brings me back to my original point, methods of teaching that explain HOW we got to the current way of thinking, IMHO, are the best way to teach people. The variety of responses in other threads show that not everyone is taught that way unfortunately. Your point in particular shows that even someone with an Econ background (aka me) may not have gotten this form of instruction.
I was an Econ professor in the past and this was quite literally the first thing I spoke about in introductory courses. This is the analogy used to describe what the science of economics is, the study of the allocation of scarce resources.