people far underestimate the importance of the Freshwater Economics (e.g. University of Chicago and University of Minnesota) in comparison to Saltwater Economics (e.g. Harvard, Yale, Princeton)
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Most people believe that universities, like Harvard, Stanford, Princeton, are historically better and should be more prestigious than places, like Chicago, Minnesota, Carnegie Mellon, for economics. In terms of financial economics and macroeconomics, the opposite is definitely true in my view. For most of the last 50 years, the leading ideas and models in these fields remain with Freshwater Economics Schools, which are also sometimes known for neoliberal economics or the Chicago School of economics.
For example, most people continue to think that investing in mutual and hedge funds is a good idea. Recently, the biggest hedge fund in the world (Bridgewater Associates) announced losses of about 20% in the first quarter alone , thousands of other funds had huge losses, and many people got shocked. However, there should be no reason to be surprised at all. According to the Efficient Market Hypothesis (EMH), developed by former University of Chicago student and current professor Eugene Fama (the 2013 Nobel Laureate), it is impossible to outperform the market due to skills. Investors will always be better off investing in the market index rather than giving their money to professionals trying to buy stocks at a low price and sell them at a high price. The data is overwhelmingly in favor of this Chicago theory, i.e. professional investors do not earn more than the market itself, on average. Even all major behavioral economists (e.g. Richard Thaler, Daniel Kahneman, Robert Shiller) tell people to buy the total stock market index or ETF (e.g. S&P 500, MSCI EAFE). In practice, behavioral economics helps explain why people invest so badly but has limited application for investors. The EMH clearly remains the main model to be followed by investors.
Additionally, during periods of crisis, governments have been printing money as a way to try to control the economy with virtually no contestation from their populations. However, we already know for decades that this is largely impossible. Former University of Minnesota Professor Thomas Sargent (the 2011 Nobel Laureate) has already shown that by printing money you can affect nominal prices in the economy (i.e. inflation), but you cannot change real wages or the output of the economy. Even if you could reach only the poorest people in the society with monetary expansion, you would be creating an inefficient redistribution as the whole population would be paying for this money printed through inflation, which is an indirect form of taxation. The most influential economist of the last 50 years in terms of policy was Milton Friedman, a former professor at the University of Chicago and the University of Minnesota. He led the way to economic policies during the Ronald Reagan and Margaret Thatcher periods. And before Friedman, one of the 2 most influential economists in the world was Friedrich Hayek, i.e. another Chicago professor.
Not to say that all these models have been based on the idea of rational expectations, which was established by Robert Lucas, Finn E. Kydland, Edward Prescott, which were all former students and/or professors from Chicago, Minnesota, and Carnegie Mellon. All these people I cited are Nobel Prize winners. In fact, the University of Minnesota has roughly as many Nobel winners in economics as Harvard and the London School of Economics, and more winners than all Latin America and European Union countries combined. No university has more Nobel Laureates in economics than the University of Chicago. About half of all Nobel Laureates in economics have some connection with UChicago.
Obviously, many significant contributions have been made that help us understand economics better from Saltwater Economics. For example, I am a big fan of the Grossman-Stiglitz Paradox, the Balassa-Samuelson Hypothesis, the Mundell-Fleming Trilemma.
Why do I think Saltwater Schools have more prestige and are usually more influential on normal people than Freshwater Schools even within the fields that schools like Chicago and Minnesota dominate? I think one of the factors is that they have larger institutions, in the sense of larger endowments, and are also located in places with more developed media. These 2 factors, among many others (such as bounded-rationality), incorrectly shape people's' perception.
Some core references from the people cited: