From developing new theories that show how economics can explain human behavior to exploring innovative concepts of how governments influence the development of wealth, University of Chicago economists have been at frontiers of research for most of the University’s history.
Their discoveries, often viewed as radical when first published, have since become accepted wisdom by other scholars, as well as by policy-makers who frequently have looked to the writings of University scholars for guidance. That leadership, in both the Department of Economics and the Graduate School of Business, is part of a strong tradition of taking ideas seriously and being willing to fight for a finding in order to arrive at the truth.
“In the Department of Economics and the Business School, we try to put an emphasis on research, free discussion and on challenging received opinion through tough questioning and criticism,” says Gary Becker, University Professor in Economics, Sociology and the GSB. “We try to pick faculty members who challenge the prevailing wisdom, even when most of the profession may disagree with them. I think that’s the main thing that explains our success.”
The work of Chicago economists have provided insights that help explain a wide variety of behaviors. Their research has helped scholars better understand discrimination, the impact of education on wealth, marriage, monetary effects, and people’s expectations of the future, he said
Philip Reny, Chair of Economics, adds, “Chicago attracts smart people who work in an environment where they’re not just following the pack. Here you are thinking independently and then following through in a serious and scientific way.”
That tradition has its roots in the early part of the 20th century and was given a big push by Frank Knight and others who influenced a generation of scholars. That influence continues to resonate throughout the study of economics at Chicago. Knight challenged many of the economic theories popular before World War II. His student, Milton Freidman, along with Friedrich von Hayek, another Chicago economist, became influential economists as well. These scholars and others they influenced contended that when left to make decisions for themselves, people usually make ones that benefit them and as a result, society as a whole flourishes. Through their arguments they were able to show the world the follies of state-controlled economics.
The economic revolutions instituted by President Ronald Reagan and British Prime Minister Margaret Thatcher, which led to the deregulation of huge economic sectors, had their intellectual roots at the University of Chicago. George Stigler, a Chicago economist, did important work on the problems of government regulation and received the Nobel Memorial Prize in Economic Sciences in 1982 in recognition for that research. Thatcher, for her part, was influenced by the writings of von Hayek. Both Reagan and Thatcher provided a strong challenge to communism during the 1980s, and they gained confidence from ideas birthed at the University of Chicago.
The commitment to seeking the truth, even if the going is rocky, is the kind of academic courage that exemplifies the rigor of study and the originality of ideas at the University. It has led to new thinking on many topics, showing how the field of economics helps to provide an understanding of human behaviors as varied as how people make decisions about marriage, how they make decisions about what is best for their children, and how they can use financial insights to better understand the markets. Chicago economists are also doing important work on the value of early childhood education as well as leading research on developing economies. Although Chicago economists are often called on by policy-makers, business leaders and the media for their views, it is the excitement of fresh ideas and not the lure of the national spotlight that powers the engine of Chicago economics.
“This is where progress in science takes place — from the new ideas, the ideas that don’t occur to most of us but occur to one or two special people,” Reny said. “That may be the best explanation of why Chicago has racked up so many Nobel prizes. It’s the new ideas that get the profession moving in important new directions, and those are recognized not only by the profession but also by Sweden as well. That’s what we continue to aim for.”
The University has strong connections to the Nobel Memorial Prize in Economic Sciences through its faculty, graduates, and researchers. Twenty five of the 61 scholars who have received the award since it was established in 1969 have University of Chicago connections. In addition to 1992 winner Gary Becker, the 25 include five current faculty members: Ronald Coase (1991) Robert Fogel (1993), James Heckman (2000), Robert Lucas, Jr. (1995), and Roger Myerson (2007). These faculty represent a range of fields, including the Law and Economics program in the Law School in addition to the Department of Economics and the Graduate School of Business.
These faculty members share a continuing desire to pursue their curiosity and develop even more great ideas. “At Chicago, even if you’re a Nobel Prize winner, you’re only as good as your latest paper,” one Nobelist has joked.
Writers Greg Holden and William Harms contributed to this article.