Economics Atlas

How Wealth Is Ordered
Sign In
Text size
100%
Theme
Schools of Thought

Chicago School

Chicago School, Monetarism and the Free-Market Counter-Revolution

The Chicago School refers to the distinctive approach to economics developed at the University of Chicago from the 1930s onward, associated first with economists including Frank Knight and Jacob Viner and later, from the 1950s through the 1970s, with Milton Friedman, George Stigler and Gary Becker. Chicago School economists share a strong commitment to price theory, the view that rational individual choice operating through markets and prices can explain a very wide range of behavior, extended by Becker well beyond conventional markets into subjects including crime, discrimination and family decision making. The school is closely associated with a general confidence in the efficiency of competitive markets and a corresponding skepticism of government intervention, though it is broader than monetarism specifically: monetarism concerns the causes of inflation and the conduct of monetary policy, while the Chicago School as a whole extends the same price theoretic method across microeconomics, law and economics, and much of applied economic policy, and its leading twentieth century figure, Milton Friedman, was a central architect of both traditions at once. Historians of economic thought commonly date the identity of the school to the arrival of Frank Knight at Chicago in 1927, though the label and its wider public association with free market economic policy crystallized more fully during the ascendance of Milton Friedman in the 1950s and 1960s.

Facts
Disputed
Start Year
1927 2
Historians of economic thought commonly date the identity of the Chicago School to the arrival of Frank Knight at the University of Chicago in 1927, though the label and its wider public association with free market economic policy crystallized more fully during the ascendance of Milton Friedman and George Stigler in the 1950s and 1960s.
Core Tenet
Competitive markets are generally efficient and self correcting, price theory grounded in rational individual choice can explain a very wide range of social behavior beyond conventional markets, and government intervention in the economy should be justified narrowly, case by case, against its actual costs rather than presumed automatically beneficial. 1
Chicago School
Filter Results1 entry
Connections

Associated Figures and Events

Wikipedia's own infobox names Chicago school of economics as Schwartz's school or tradition; she is best known for A Monetary History of the United States, co-authored with fellow Chicago-school monetarist Milton Friedman, already live on this atlas.

Source Wikipedia

Founding figure of the Chicago School; Risk, Uncertainty and Profit (1921); arrived at the University of Chicago in 1927.

Source Risk, Uncertainty and ProfitFrank Knight
Source Gary Becker (Wikipedia)

Both Schultz and Becker, the theory's founding figures, were Chicago School economists.

Source Wikipedia
Additional Source Human capital (Wikipedia)

Central figure of the Chicago School price theory tradition alongside his monetarist economics.

Source Capitalism and FreedomMilton Friedman
Source Theodore Schultz (Wikipedia)

Associated With

Overlapping but distinct: monetarism concerns money supply and inflation specifically, while the Chicago School extends the same price theoretic method across microeconomics and applied policy; Milton Friedman is the central figure common to both.

Source The New Palgrave Dictionary of Economics
Sources
1. Risk, Uncertainty and Profit
Frank Knight, 1921
  • Early chapter reviewing A.H. Willett's theory of risk
    Risk is defined as "the objective correlative of the subjective uncertainty" (p. 29), which varies with the mathematical chance of loss in such a way as to be at a maximum when the chances for and against the event are exactly even.
  • Associated Figures and Events: Frank Knight
2. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.View the Source
Capitalism and Freedom
Milton Friedman, 1962Associated Figures and Events: Milton Friedman
The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With: Monetarist Economics
Gary Becker (Wikipedia)
Wikimedia FoundationAssociated Figures and Events: Gary Becker, Lead section
Quote, Associated Figures and Events: Gary Becker, Lead section
He was a professor of economics and sociology at the University of Chicago, and was a leader of the third generation of the Chicago school of economics.
View the Source
Theodore Schultz (Wikipedia)
Wikimedia FoundationAssociated Figures and Events: Theodore Schultz, Lead section
Quote, Associated Figures and Events: Theodore Schultz, Lead section
Schultz rose to national prominence after winning the 1979 Nobel Memorial Prize in Economic Sciences.
View the Source
Wikipedia
Wikimedia FoundationAssociated Figures and Events: Anna Schwartz, Anna Schwartz, infobox School or tradition field
Quote, Associated Figures and Events: Anna Schwartz, Anna Schwartz, infobox School or tradition field
School or tradition: Chicago school of economics
View the Source
Human capital (Wikipedia)
Associated Figures and Events: Human CapitalView the Source
Chicago school of economics (Wikipedia)
WikipediaIn Group: Chicago School and Monetarism of the Mid Twentieth Century, Lead
Quote, In Group: Chicago School and Monetarism of the Mid Twentieth Century, Lead
The Chicago school of economics is a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago, some of whom have constructed and popularized its principles.
View the Source
Comments (0)
No comments yet. Be the first to share a thought.
Reader Challenges (0)
No disputes yet. Spotted an error or a better source? Open the first one.