Top Schools to Study Austrian Economics

Pete Boettke writes:

For good and bad, the vast majority of graduate programs in economics offer roughly the same policy emphasis. To be sure, they emphasize different fields of study (e.g., industrial organization, monetary economics, and public economics) and different methods (e.g., formal theory, applied econometrics, computational methods, and experimental to name a few). In most graduate programs, there will usually be a few faculty members who have very strong sentiments about the market as the main allocation mechanism and pessimism about the government in that role. They certainly would not dominate, but they will not be absent either. And this is true whether we are talking about the elite programs such as Harvard, Chicago, Princeton, MIT, and Stanford or run-of-the-mill programs such as Iowa or Michigan or Maryland. It is no longer like the 1960s, where free market economists were only found at Chicago and its satellites such as UVA, UCLA, Washington, and Rochester.

DOCTORAL PROGRAMS (leading to PhD)
Claremont Graduate School (CA) — http://www.cgu.edu/pages/653.asp
Students can specialize in both Neuroeconomics/Behavioral Economics and Public choice/public finance. Interested students should contact Paul Zak.

Clemson University (SC) — http://economics.clemson.edu
Students can specialize in public choice economics and property rights economics as faculty include Robert Tollison, Bruce Yandle and Dan Benjamin. Interested students should contact Skip Sauer.

Florida State University (FL) — http://mailer.fsu.edu/~tzuehlke/doctoral
The DeVoe Moore Center at FSU (with Professors Benson, Gwartney and Holcombe) provides students interested in studying the role of government in the market economy with fellowships and research support. Interested students should contact Bruce Benson.

George Mason University (VA) – http://economics.gmu.edu
George Mason is the home of ICES (experimental economics), CSPC (public choice economics), LEC (Law and economics), and Mercatus (Austrian economics). Students can specialize in these areas during their graduate students, as well as more traditional fields such as Industrial Organization, Public Finance and Monetary economics. Interested students should contact either Dan Houser or Richard Wagner.

New York University (NY) — http://econ.as.nyu.edu/page/home
NYU is the highest ranked program in economics that is strong in Austrian/free market economics. This is the intellectual home of Ludwig von Mises (1945-1969) and Israel Kirzner (1956-) and interested students should contact either Mario Rizzo or David Harper.

Suffolk University (Mass) — http://www.suffolk.edu/college/4408.html
The Beacon Hill Institute provides a strong public policy focus, and the specialization in public choice/public finance is a very strong track. Interested students should contact Ben Powell.

West Virginia University (WV) — http://www.be.wvu.edu/phd_economics/
Very strong in the fields of public finance and public choice. Interested students should contact Russ Sobel.

GRADUATE PROGRAMS (MA/MS)
San Jose State University (CA) — http://www.sjsu.edu/economics/graduate_students/ma_econ/index.htm
Program has been developed over the past decade and has been an excellent feeder program to PhD programs. Interested students should contact Edward Lopez

Loyola University in New Orleans (LA) — http://www.business.loyno.edu/bba/economics
Walter Block and his colleagues have built a strong program and are investigating establishing a graduate program that will be an outstanding feeder program for PhD programs. Interested students should contact either Walter Block or Dan D’Amico

UNDERGRADUATE PROGRAMS
Beloit College (Wis) – http://www.beloit.edu
Emily Chamlee-Wright has built a very strong educational program for free market students. Also on the faculty is Josh Hall.

Grove City College (PA) — http://www.gcc.edu
Very strong emphasis on Austrian/free market economics. Faculty include Jeff Herbener and Shawn Ritenour.

Hillsdale College (MI) — http://www.hillsdale.edu
Very strong emphasis on Austrian/free market economics. Faculty include Charles Steele, Ivan Pongracic, and Nicolai Wenzel.

Hampden-Sydney College (VA) — http://www.hsc.edu
Very strong emphasis on Austrian/Virginia Political Economy/free market economics. Faculty include Tony Carilli, Greg Dempster, and Jennifer Dirmeyer.

Rhoades College (TN) — http://www.rhodes.edu
Strong academic program with very good faculty in economics. Contact Art Carden for information.

Troy University (AL) — http://www.troy.edu
A newly established economic program under the direction of Scott Beaulier. Scott is building the program quickly and Troy promises to be one of the best options for students interested in free market economics to pursue.

20 Startling Facts About the US Housing Market

Two posts this morning caught my attention. The first is linked above and is familiar ground. The second is an excellent blog - The Sports Economist - and a post on subsidies for sports arenas.

Our recent experience in government involvement in housing confirms a great deal of the underlying rational for the ABCT. That said, given the 20 facts about housing, the continued set of informal institutional support for government intervention in markets and the expansion of government - I wonder to what extent short and intermediate growth in our country will be retarded. Or, will the impact be more severe as Paul Krugman fears and a Japanese style stagnation?

Process analysis v statics

I was speaking with a colleague today whose son is in an introductory class in microeconomics at a state institution. The class is traditionally taught with a heavy emphasis upon outcome and not process, absent any real cohesive attempt to integrate the economic way of thinking with a strong dose of algebra, geometry and some calculus. And we wonder why . . .

In any event, the following post seems on point from The Coordination Problem

Austrian Final Exam Question
Steven Horwitz

I'm not giving a final exam in my Austrian course, but if I was....

Consider the following quote from Kirzner and explain what you think it means. Apply it to at least two standard models of market structure. “As soon as we draw the cost and revenue curves facing the firm, no matter what their shape, we have created a theoretical case in which all competitive behavior has by definition been ruled out.” (1973, p. 108).

Do you think Kirzner's argument is correct? Why or why not?

Extreme Aggregation Misleads Macroeconomists and the Fed

In this accessible post, Higgs channels Hayek and ABCT to remind us of the dangers of aggregation.

A serious problem lurks, however, in the way the mainstream experts think about the economy, and hence in the kind of analysis they undertake to assess its current performance and its likely future changes. All too often, they model the macroeconomy as a black box into which flow undifferentiated “labor” services and “capital” services and out of which flows a uniform substance called “output,” measured empirically by estimates of real GDP. Units of this output command a price known as the “price level,” measured empirically by the GDP deflator; otherwise, prices play no role in the model. The interest rate plays only a limited role as a determinant of the demand for money and as a minor determinant of saving and investment spending. Time is essentially irrelevant.Extreme Aggregation Misleads Macroeconomists and the Fed

Rational

What is it economists mean when they say we assume people are rational? Is it that they have complete and perfect information? If so, then any cognitive biases or any errors in judgment can be considered to be irrational. This is illustrated by the old joke about two economists walking down the sidewalk and one sees a $50 bill on the ground. He begins to reach down and pick it up and the other says, don’t waste your effort. If that were really a $50 bill on the ground, it would have been picked up already. This is the strict form of the rational expectations hypothesis. This is the form that Keynesians attacked as their free market straw man during the recent bubble and crash pointing out that if the world was one of REH, then there could be no bubbles. Since there was a bubble the free market does not make function properly.

While perhaps Robert Lucas or Gene Fama support the strict form of REH, I suspect they and most others agree more with the weaker form. If economists accept the weak form of REH, then they say that people do not have perfect and complete information, but will get that information over time. In this case, temporary errors, perhaps such as a bubble, can occur, but these will definitely be temporary. (Fama says bubbles can not develop because when the bubble is occurring no one knows whether it is a bubble or not. So, it is not really a bubble.) In this camp, it is sometimes argued that errors can persist as long as there isn’t a huge profit opportunity to reduce them. For instance, many behavioral economists argue that systematic biases such as Prospect Theory (bad outcomes are disliked more than good outcomes are enjoyed) or Revenge and Reciprocity may determine the equilibrium, or that the economy can reach a stable equilibrium which is second best or inefficient. But this won’t change unless the cost is large enough. Many economists argue that path dependence or network externalities can lead to long term inefficient equilibria. Others point out that the switch from Wordperfect to Word negates such a claim, as does the explanation of VHS over Beta, the existence of the QWERTY keyboard, etc.

The Austrian school is based on praxeology, the study of human action. It does not make assumptions of rationality except to say that individuals are self interested. Humans will act on information they have and information they collect. They are unlikely to have complete information. They have cognitive biases, they are affected by how others view them, they react to the behaviors of others, in short, they are human. The market collects all the information embedded in human action and reflects it in the price. Spontaneous order is the result. Is this second best or first best? This is the wrong question; it makes no sense. The result has to be what individuals perceive to be in their best interest or they wouldn’t behave as they do. Perhaps we could stand above it all and say, oh that is a wrong choice because they didn’t take so and so into account. But this also is wrong – it is the same as saying “I know better what is good for you than you do.” Moreover, the Austrians look on the economy as one of constant motion, not one reaching a static equilibrium. People are always collecting information and responding to stimuli and seeking ways to be more efficient and more profitable.

The reason I bring up this material is that this past week I got into a debate about whether inefficient stable equilibria could exist with a behavioral economist and a Keynesian. The debate went nowhere. It reminded me of Pratt’s frequent posts about civil discourse. It wasn’t. In thinking about the debate, I don’t think we were even talking on the same plane. Their definition of rational was one wherein people can and do make irrational choices all the time. Only those of us who “really know” can say whether their choice is rational or not. It is frustrating because the pseudo intellectual basis of arguments by economists like Paul Krugman and Robert Frank sound reasonable and impressive to numbers of people. Yet, when broken down, their entire argument is “I know better than you do what is good for you.”