An Unusual History of University of Chicago’s revered Economics Department

Profs Arnold Harberger and Sebastian Edwards (both at UCLA) have written a paper on the history of the University of Chicago’s Economics Department.

This paper is about the Department of Economics at the University of Chicago, between 1947 and 1982. The paper has the form of a conversation between the two authors and covers issues such as the existence of a “Chicago School,” the Department’s governance, the personalities of some well-known members such as Frank Knight, Milton Friedman, and Robert Mundell, teaching, and the “Chicago boys.” It also deals with the relation between members of the Department and those of other leading Schools.

The two authors discuss some of the core ideas in this interview:

SE: Maybe we should end with a peroration of sorts, with a summary of what you see as the great advantage of the Chicago Department during the years we have been talking about. How would you summarize this advantage?

ACH: A clear advantage was that, among the leading departments, it was smaller; it was only half, or less, than Harvard and Yale. Hence, just about every professor at Chicago was not a supernumerary, everyone was important in his or her own field. The range that we had, from Milton, Harry Johnson, Bob Mundell, T.W. Schultz, John U. Nef, Jim Heckman. Everybody was a real leading person. Because of the size, the number of people responsible for a field was small, and that allowed us, for instance, to have Harry Johnson and Mundell in international, at the same time. So, it was a great Department. Now, our small size had to do with the fact that the University of Chicago didn’t have the great mass of undergraduates that other schools had. At the end, I think that we go back to my three points discussed above. The Chicago School was about the connection between theory and applied analysis. Always test the implications of the theory, confront data with predictions, and do it again and again. Take both theory and data seriously.

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