Wealth
of notions
>> Finally,
22 economists whose ideas have at least one point in common: they
all won the Nobel Prize. Here, in translation, are the theories
that made Chicago famous.
When
the 2001 Nobel laureate selections (http://www.nobel.se)
were announced in October (marking the 100th anniversary of the
five prizes specified in Alfred Nobel's will) no Chicagoans were
among the honorees. Our long-term record is better: of the more
than 700 Nobelists, 73 have been students, researchers, or faculty
at Chicago (http://www-news.uchicago.edu/resources/nobel),
placing the U of C second only to Cambridge, with 77.
Many
of Chicago's Nobel honors have come in the sixth and youngest
category: the Bank of Sweden Prize in Economic Sciences in Memory
of Alfred Nobel, established in 1968 by the Sveriges Riksbank,
the Swedish equivalent of the Federal Reserve System. Of 49 winners
in economics to date, 22 are Chicagoans. In the past 11 years,
six winners were at Chicago (in the Department of Economics, the
Committee on Social Thought, the Law School, or the Graduate School
of Business) when they received the award.
So
pervasive is the University's identification with a distinctive
Nobel-winning approach-dubbed the Chicago School of Economics-that
many media summaries characterized the 2001 winners as "un-Chicago."
That
phrase poses no problems to individuals well versed in economics.
Such people could likely understand and even explain what the
Academy meant when it honored Robert E. Lucas Jr. in 1995 for
"having developed and applied the hypothesis of rational
expectations, and thereby having transformed macroeconomic analysis,"
or Milton Friedman in 1976 for "his achievements in the fields
of consumption analysis, monetary history and theory, and for
his demonstration of the complexity of stabilization policy."
But the intelligent lay audience may respond as did a student
in Introduction to Microeconomics. When I announced in October
2000 that my colleague Jim Heckman had just received a Nobel (formally
"for his development of theory and methods for analyzing
selective samples"), the student inquired: "So what
has he done that will benefit me and make my life better?"
What
follows is my attempt to answer that question, translating and
summing up the accomplishments the 22 economists whom Chicago
claims on T-shirts and in official publications as its own. Along
the way I hope to show how close they and their research are to
a core "inner circle" to which the label Chicago
economist is typically applied.
For
starters, Chicago economists do empirical, real-world research,
combining basic theory with data to address contemporary-and historical-problems.
They are willing to tackle unpopular, controversial topics and
to consider any new idea about what makes people tick. They constantly
redefine and expand boundaries-to include finance theory, the
economics of information, rational expectations, and law and economics.
Chicago economics analyzes the responses of individuals, firms,
and the public sector to costs, benefits, and incentives; pairs
a fundamental appreciation for the power of competitive forces
with a healthy distrust of governmental intervention in markets;
and places a high value on personal and economic freedoms.
Being
a Chicago economist is also equated with hard work-something Milton
Friedman claimed was easier in Chicago because of the climate.
Or, more idealistically, as 1970 laureate Paul Samuelson allegedly
declared: "Chicago is not a place but a state of mind."
A
TASTE OF CHICAGO
In
the outermost circle are three distant relations-Nobelists who
were at Chicago on a short-term research or faculty appointment
and who are generally associated with another institution or school
of thought...
MAROON
IN THEIR BLOOD
Closer
to the central core are ten Nobelists who were graduates of the
College and/or the Social Sciences Division (ten of the 22 economics
laureates have U of C degrees, including four from the College;
three earned both their undergraduate and graduate degrees from
Chicago) or were on the faculty or in research positions for a
substantial length of time. Their work reflects Chicago's approach,
and in many instances they were honored implicitly for contributions
they made while on the quadrangles...
THE
CHICAGO MACHINE
At
last we reach dead center: nine faculty members recognized immediately
and completely as Chicago economists...
WILL
THE CIRCLE BE UNBROKEN
When a Chicago faculty member
gets that early morning October call from Sweden, which happened
a staggering six times from 1990 to 2000, I am often asked by
friends in the administration and colleagues in other departments
if there are still other contenders left here for the economics
prize, or if the "Chicago School" Nobel well has finally
run dry...
Allen
R. Sanderson, associate chair in the Department of Economics and
senior lecturer in the College, received the Quantrell Award for
undergraduate teaching in 1998. An expert on sports economics,
he has written on free agency, the economic impact of stadiums,
and home-court advantage in the NBA, and is at work on two pieces
on competitive balance for the Journal of Sports Economics.
©2001 The University
of Chicago® Magazine