Economics at Chicago
The chief consideration in choosing a department at which to do graduate work in economics must be the quality of its faculty as economists and as teachers of economics. The Department of Economics at Chicago has always ranked among the handful of leading departments in the world. It has claimed a disproportionate share of the honors the economics profession can bestow.
Since 1969, when the Nobel Prize in economic sciences was first awarded, twenty-four recipients of that prize have been faculty, students, or researchers in the Department of Economics, Law School, or Booth School of Business at the University of Chicago, including Milton Friedman and George Stigler. Five Nobel laureates are currently members of the department: Gary S. Becker, Robert W. Fogel, Robert E. Lucas, Jr., James J. Heckman, and Roger B. Myerson. In addition, four of the six recipients of the American Economic Association’s Walker Medal were members of the faculty (J. M. Clark, F. H. Knight, Jacob Viner, and T. W. Schultz). The John Bates Clark Medal has been awarded to five Chicago economists: Milton Friedman, Gary S. Becker, James J. Heckman, Steven Levitt, and Kevin M. Murphy. Since World War II, the department has had, relative to its size, a larger number of faculty than any other serving as presidents of the American Economic Association. Former faculty members and students currently hold leading positions as economists inside and outside academic life.
These honors are only one class of testimony to an accepted fact: Chicago is a particularly innovative department of economics. The proportion of new ideas in economics that have emanated from or become associated with Chicago over the last forty years is astonishing. Any definition of the Chicago School would have to find room for the following ideas (in chronological order from the 1940s to the present): the economic theory of socialism, general equilibrium theory, general equilibrium models of foreign trade, simultaneous equation methods in econometrics, consumption as a function of permanent income, the economics of the household, the rationality of peasants in poor countries, the economics of education and other acquired skills (human capital), applied welfare economics, monetarism, sociological economics (entrepreneurship, racial discrimination, crime), the economics of invention and innovation, quantitative economic history, the economics of information, political economy (externalities, property rights, liability, contracts), the monetary approach to international finance, rational expectations in macroeconomics, and mechanism design. The unifying thread in all this is not political or ideological but methodological, the methodological conviction that economics is an incomparably powerful tool for understanding society.
Chicago is known for its leadership not only in using this tool but also in teaching its students how to use it. Chicago has more than its share of gifted teachers, but the two principal reasons for its excellence in teaching are the rigorous system of examinations in the first two years of graduate study and the so-called “workshop” (that is, seminar) system for advanced students. Both are unique to Chicago. In preparing for the examinations by taking courses and working together in study groups, graduate students at Chicago acquire an unmatched mastery of economics. The workshop system then guides them through their Ph.D. dissertations. There are fourteen workshops and eight working groups, in a wide variety of fields of research, meeting in small groups weekly to hear and discuss papers by students, faculty, and leading scholars from inside and outside Chicago. A vigorous placement effort, the wide contacts of a faculty central to the discipline and, above all, the high quality of the economists produced by this program assure students with degrees from Chicago the best academic or non-academic jobs that their efforts and abilities warrant. Chicago has an unexcelled Ph.D. program, with recent graduates employed at numerous top-ranked universities, private firms, and such agencies as the World Bank, the International Monetary Fund, and the Federal Reserve System.
The department has other noteworthy features. It is socially coherent and located in one place, making its twenty-nine faculty members accessible on a casual basis to the students and to each other. The economists at the Chicago Booth School of Business, the Law School, and the Irving B. Harris Graduate School of Public Policy Studies (constituting together a first-rate economics department in their own right) have unusually close relations with the department physically and intellectually, greatly enriching the student experience. For example, Chicago’s Booth School is an international center for the study of, among other things, the mathematical theory of corporate finance, as the Law School is for the study of law and economics; both fields can be offered for examinations and dissertations in the department. The Journal of Political Economy, ranking second in circulation among American journals in economics only to the American Economic Review, is published at Chicago, as are the Journal of Law and Economics, the Journal of Business, the Journal of Labor Economics, and the Journal of Legal Studies, all major journals in their fields of economics. The department is unusually cosmopolitan, with an international faculty, approximately 230 full-time graduate students in residence, and about 290 undergraduate majors graduating each year from all parts of the world. It has been said that the average location of the department is 20,000 feet over the South Atlantic, for a distinguished faculty is naturally involved in the world’s thinking and the world’s work. The result back home in Chicago, reinforced by the city’s role as the air travel center of the United States, is a steady stream of return visitors from other universities, some for visits to a workshop and others for longer-term participation in the intellectual life of the department. Over the academic year more than a hundred outside speakers give papers in workshops. The Chicago student’s exposure to new ideas when they are in fact still new is unequaled.