Noah Smith — Econ 101: Chicago? M.I.T.? Nope, Berkeley's on Top

The point is that Berkeley has done something similar to what the old Chicago School did -- it has changed the entire game. Through intellectual force and creativity, it has turned the ship of the profession in a new direction. We might call it the Berkeley Reformation. The Chicago School made economics about theory; the Berkeley Reformation has made it more about data. The Chicago School made economics about efficiency; the Berkeley Reformation has made it about inequality as well. The Chicago School was Panglossian in its belief that markets work well; the Berkeley Reformation showed deep, fundamental reasons that they break down. The Chicago School described the world in terms of perfectly rational agents; the Berkeley Reformation added the complexity of flawed decision-making.

In the 1980s and 1990s, it could rightly be said that Chicago had conquered the economics world. But in the 2010s, the profession has pointed in Berkeley's direction.…

Bloomberg View
Econ 101: Chicago? M.I.T.? Nope, Berkeley's on Top
Noah Smith | Assistant Professor of Finance, Stony Brook University