I simultaneously love and hate UChicago! What should I do?

Colleges and Universities A-Z University of Chicago ✅
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<p>I love the school's academic focus! The curriculum is amazingly expansive and I really value that a lot. The perspective that one can gain from such an education, is second to none. The community is amazing, one can really learn a lot just by being around other people. I mean, if conservation can burst into passionate discussions about Godel Incompleteness Theorem, it is hard not to learn. </p>

<p>BUT! As a person who plans to major in economics, given that is my passion, I hate the Chicago economic school of thought. It doesn't make sense to me at all! In particular the idea of rational expectations. I mean, I literally loathe it. For example, when I was watching UChicago Coursera online course on Asset Pricing, and realized that a great deal of the course assumptions are derived from the UChicago's economic school of thoughts, I instinctively started swearing at my computer and started repudiating the professor's line of reasoning. </p>

<p>I really love UChicago. Infatuated is more of the right word. But I am afraid I will end up miserable studying economics. What should I do?</p>

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<p>conversations*</p>

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<p>Very simple, don’t go there. Have you even been admitted yet? My kid had a love/hate relationship with U of C as well (but for other reasons)… she was admitted for 2013-14. She decided to attend another school, is very happy there, and now thinks that U of C wouldn’t have been the best fit for her. There are other schools where you can find an intellectual fit besides U of C. Better that you figured this out now than once you had committed… </p>

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<p>OP, I suspect you may find that you have a love/hate relationship with the field of economics, regardless of where you go to school. All of economics is built on some set of idealized assumptions about how he actors will behave–you start with these assumptions and see where they lead. Of course, one can and should also think about the appropriateness of the assumptions, especially when the results are going to be used to influence public policy. But I didn’t quite understand what your problem is with rational expectations that would cause “loathing”. And I doubt that you will be able to completely escape it anywhere. </p>

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<p>Don’t major in economics while you’re at UofC; major in something else. </p>

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<p>DavidTaleb–A couple of thoughts. From what I can see, the UChicago undergraduate economics degree is characterized mostly by the application of quantitative methods to learning and research, a questioning approach, and a large body of professors and students who are really smart and good at what they do. The overriding philosophy at UChicago is that no argument is accepted on its face: the argument must sustain itself through deep, careful inquiry and questioning from your fellow students and teachers. I think your arguments will be well received if they are carefully reasoned and supported by data. Think of this as your chance to straighten out all those misguided UChicago economics profs! Good luck to you.</p>

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<p>You’re coming into this with the wrong mindset. You, who are in high school and have very likely done zero serious research in economics, are convinced that you already know enough to dismiss the Chicago School of Economics as nonsense. I assure you that you won’t be alone at UChicago in thinking this (if anything, most UChicago undergrads possess similar opinions), but if you matriculate with the impression that you already know precisely how the world works, you won’t reap anything from a Chicago education. (Besides, consider for a second that while UChicago keeps on racking up Nobel Prizes, you haven’t even studied advanced mathematics or economics. That isn’t to say that you know nothing, or even that you don’t have enough knowledge to challenge your professors on some points - but it’s indication that you don’t know nearly enough to make such heavy assertions.)</p>

<p>A UChicago education requires that its recipients put aside their assumptions about the universe in order to rebuild their knowledge from the ground up. As is written on the gothic walls of (the once) Harper Library, “Read not to contradict and confute; nor to believe and take for granted; nor to find talk and discourse; but to weigh and consider.”</p>

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<p>Oh, as if.</p>

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<p>intparent-should have employed the smiley face to show I was giving the OP some good natured ribbing. </p>

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<p>Thanks everyone for all your help! I have gone into some self-reflection and realized that…UChicago is the place to be after all. As phuriku mentioned, I do not understand the Chicago school of economics enough to criticism it and going to UChicago would certainly help with that. After all, the best way to destroy something is from the inside, not the outside.</p>

<p>But regarding why I am convinced that UChicago economics does not reflect reality, is a result of many different readings and empirical observations. For example, Karl Popper’s works on science or pseudo-science repudiated much of the UChicago economic mode of thinking. Another example could be the spectacular bursting of LTCM, a hedge fund run by TWO of UChicago Nobel Memorial Prize winners, Myron Scholes and Robert Merton. Also, how can Eugene Fama claim that are inefficient and market movements are random, when Warren Buffett, George Soros, David Tepper, Bill Ackman, David Einhorn can have a long term track record of beating the market, is beyond me. </p>

<p>I have an obsession with economics since early pre-adolescent, so i am actually very familiar with the works of the great economists, from Adam Smith to Hayek to Friedman, and to say that I do not know enough to be convinced, may be true but insulting. </p>

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<p>*criticize</p>

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<p>sorry for the terrible english, i did not spell-check</p>

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<p>Don’t worry about ideology at UChicago in undergrad. You’ll mostly learn stuff that you would likely learn at any other top economics department. Stuff that mostly counts as mainstream economics (which you can very well disagree with). UChicago prides itself in embracing free, albeit rigorous, inquiry. Make it your mission to participate in research and REU’s and see if you can debate some of these professors you now dismiss. </p>

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<p>Well, you sound like you have a healthy mindset, so good luck to you.</p>

<p>To get into the specifics, yes, those are oft-cited (and good) criticisms of Chicago Economics. (Although it’s interesting that you cite Black and Scholes, since as you probably know, they’re famous for one of the most oft-used options models, taught even in less freshwater-prone schools.) But even if you discount the ideological foundations of Chicago Economics, if you give it a bit of leeway, it has a number of very good applications for the real world. </p>

<p>For instance, sure you can criticize Eugene Fama all day (and trust me, saltwater economists never shut up about him), but if you’ve ever read the work of Benjamin Graham (Buffett’s old instructor, as well as one of the most famous detractors of the EMH), you’d know that ironically, Graham’s main thesis is that value investing works for an elite few who have the resources and intelligence to gather quality information, but that EMH basically holds for everyone else. So can you legitimately say that the EMH, even if invalid, is not greatly useful under certain constraints?</p>

<p>From my own experience, saltwater economists like to pick certain easy targets in the freshwater school and criticize them to no end (Krugman serving as an obvious example). But this discounts all of the amazing contributions that Chicago has made to economics, and it also ignores all of the problems inherent to saltwater economics.</p>

<p>Personally, I work in diplomacy and defense and have no real stake in this argument. However, it always puzzles me why people are so critical of the Chicago school. I think part of it is that Chicago gets so much recognition via Nobels and other prizes, and so a lot of popular literature is aimed against the Chicago school to get more popular support for that movement, whereas Chicago economists rarely see the need to attack their opponents in popular literature. In any case, I think your viewpoints are understandable, but you definitely do need to understand that until you get in-depth with the mathematics and start participating in economic research, it’s hard to ascertain which side is more legitimate.</p>

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<p>By the way, the Efficient Market Hypothesis is not in fact a claim that all markets are actually efficient and that transaction costs are zero. If I remember correctly (it has been over 30 years since I studied this), a great deal of Gene Fama’s work had to do with the effect information costs had on markets. I am not even remotely a right winger, and I found it consistently interesting and challenging – nothing that was easy to write off with a few big philosophical criticisms. (And their professional critics don’t do that, either. That’s the stuff of newspaper op eds, not actual economics.)</p>

<p>As for your examples of people beating the markets: First, the fact that a few people have runs of good luck does not invalidate the entire concept of probability. People win lotteries, too, but that does not make lotteries a good investment. With millions of people “playing” every day, it’s not surprising that you can find a handful of people who have won consistently far more than they should. They get lionized as geniuses, and perhaps some of their success starts being self-referential, as others try to follow them into investments. But it may just be a standard Poisson distribution, in which there are always a handful of outliers with improbable results. We never hear about the corresponding outliers who lose consistently – and they tend to drop out of the “game” anyway. (It’s the same thing with “cancer clusters”: We hear all the time about areas with improbable rates of cancer, and everyone just knows what the culprit is. But we never hear about the places --likely equal in number,-- with improbably low rates of the same cancer.)</p>

<p>Second, in most cases, those people are not beating the nearly efficient market. They are looking for ways to exploit obviously inefficient markets where public information and trade opportunities are severely limited.</p>

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<p>EMH does work. Ask David Booth. ;-)</p>

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<p>@phuriku thanks for the reply and I agree with you that there are very good real life applications. But I disagree with the argument that we should discount the arguments against freshwater economics just because it is an easy target. I think it is important to ask, why is it such an easy target? And I think it is because the line of reasoning seems flawed. </p>

<p>For example, Eugene Fama did a study which compared low P/E & P/B stocks to high P/E & P/B stocks and found that those that have lower multiples, tend to outperform the latter group. He tend decided that the reason why the former group outperform the latter group, is because the former group is more risky! </p>

<p>What kind of twisted logic is that? From that line of reasoning, the Coca-Cola company, arguably the most stable company in existence, is riskier than, Netflix or Facebook. Theory does not line up with reality, and if one uses that as the foundation for an entire school of economic thoughts, the situation becomes more untenable. </p>

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<p>Eugene Fama, we await your response.</p>

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<p>This might sound crazy, but I think you would LOVE Chicago & be in love with the economics courses. The prof’s are open to having you question theories & ideas just as you have. You might not get that in other universities. But you better be able to ask the right questions & make a compelling case for your arguments. </p>

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<p>Oh, you totally belong at U of Chicago, David. Yes, you will be swearing at your computer (and textbook, though hopefully not at any of your professors), but you’d be doing that anywhere you went to study economics. And if you just can’t take it any more, switch to a different major. But I think you will love the atmosphere at U of C (I graduated many years ago but I hear it hasn’t changed that much).</p>